Pet Sitters: How to Take Advantage of the IRS Standard Mileage Deduction

If you are a pet sitter, you might easily drive many miles everyday to attend to your clients' animals. Sitters may choose to drive as many as 20 miles round trip two to three times per day to ensure their charges are lovingly cared for in their owners' absence. Even if your clients live close to your home, you may still be racking up the miles and wear and tear on your vehicle. Taking the standard mileage deduction will help you get some of that gas money back and help to ease your tax burden.

Are All Pet Sitters Eligible for the Standard Mileage Deduction?

If you own or lease the car you drive to work as a pet sitter, you can apply for the standard mileage deduction. According to the IRS, you are not eligible if you own a fleet of five or more vehicles used by your employees for pet sitting; however, if you own a business in which the sitters working for you must provide their own transportation, your employees can each take the deduction on their individual tax returns. In order to file for the standard mileage deduction, however, you must properly record miles driven for business purposes.

What Information Do I Need To Claim the Deduction?

Keep careful records, both to calculate the deduction and in case you are audited. Keep a small notebook in your car. At the beginning and end of each trip you make to care for your clients' pets, write down:

1. The Date
Simple enough: record what day it is.

2. Beginning mileage and time
This is what your odometer reads before you pull out of the parking spot, plus the time you are leaving.

3. The address of your destination(s)
Abbreviations are fine as long as you can provide the full address to the IRS in the unlikely event that you are audited. If you drive for more than one business, keep them separate by noting the purpose of your trip beside the address.

4. Ending mileage and time
Best recorded before you get out of the car, so you don't forget!

If you are making a round trip without any stops, you can record the mileage in full once you get home. Likewise, if all your stops are business related, just lump the mileage into one loop, but be sure to record the addresses. If you make personal stops on the same trip in which you are making pet sitting rounds, count only the mileage going to work destinations (and the mileage back to the house if your last destination was also work related).

What Do I Do With All These Records?

During tax season, you are going to calculate your total business mileage and personal use mileage. Both numbers must be recorded for the IRS. An easy way to do this is to add up the numbers throughout the year at regular intervals, such as once a week or each month. They more often you drive for work, the more frequently you'll want to do the math so that you don't end up with hours of work in the new year. The IRS reserves the right to audit you for at least three years after you file your return, so keep your little mileage notebooks for at least that long (IRS).

How Much Could I Save?

You might save enough to feed your own pets for a year! To calculate your deduction, multiply the miles you drove to your pet sitting jobs (or any other business destination) by the current rate. Rates are available on the IRS website. As the time of this writing, the rate for the second half of 2008 is 58.5 cents per mile. If you drive five miles per day for work, 7 days a week (pet sitting knows no holidays!) from October through December in 2008, you can deduct $269 dollars. Imagine what your savings could be for the whole year?

How Do I File the Standard Mileage Deduction?

If you are the owner or an independent contractor, report the mileage on your Form 1040 Schedule C (Profit or Loss from Business). If you are an employee, deducting your pet sitting miles on the road is a bit more complicated. In this case, you will need to report the mileage on Form 2106, and file Form 4562 to report that you filed Form 2106. Both forms are mandatory. As an employed pet sitter, the IRS may keep a small percentage of your deduction.

What Other Vehicular Deductions are Available to Me?

There is an alternative method for receiving a deduction for business vehicular use. This method, referred to by the IRS as Actual Car Expenses, is much more complicated than the standard mileage deduction. Actual Car Expenses enables you to itemize your vehicular expenses for business purposes. Qualifying expenses include depreciation, lease payments, tires, parking fees, repairs, gas and more. You must keep meticulous records in order to qualify for this method of taking a vehicular deduction.

The good news is that you don't have to. The standard mileage deduction takes into account depreciation expenses and more. Neither method is more likely to earn you a higher tax break than the other. In fact, you'd have to figure up both to see which would save you more money. Unless you hire a competent tax professional annually, it's a lot simpler to stick with the standard mileage deduction to take whatever tax savings may be coming your way.

So start now! Today, tomorrow, as soon as possible. Record the length of your drives to the house with five black labs, the farm with three horses, and the apartment with two calico kitties. You may be surprised to see how many miles you actually drive... and by how much they could save you at tax time.

Sources:

"Standard Mileage Rates." Internal Revenue Service.

"Topic 305 - Recordkeeping." Internal Revenue Service.

"Topic 510 - Business Use of a Car." Internal Revenue Service.

"2007 Schedule C (Form 1040)." Internal Revenue Service.

"2007 Instructions for Schedule C." Internal Revenue Service.