TOP ITEMS TO CONSIDER WHEN CHOOSING A MILEAGE TRACKER
"Reliability of Smart Phone apps with my clients has been unreliable over time. Clients also tend to fall-out of regular use of these SmartPhone apps because they require too much interaction and people either forget to use them, or just get tired of them."
-Quote from CPA
The App Store is flooded with all sorts of mileage tracking apps that claim to solve your logging needs. They are offered at a ridiculously low entry rate or even for free. For a business professional wasting hours each week generating a log by hand, these deals seem too good to be true. And they are.
Recalling what we discussed in part 1, the true cost a mileage tracker is...
Apps are software running on the hand-held computer you call a phone. In order to work, the program needs to be open. Most apps require constant interaction, forcing a driver to turn them on and off for every trip. Others won’t work without getting plugged in to a power source. And others hide the fact that they require additional hardware (which is expensive). For the busy business pro, it’s too easy to miss miles off your deduciton. Remembering to log your miles is the last thing on your mind. Now imagine needing to dig out your phone, open an app, plug it in and turn it on every time you get into the car.
Unless you are 100% diligent, trips will be missed. And missed trips can cost you hundreds of dollars off your deduction.
If your tracker misses only 10 miles every two days (which is easy for an app to do), you are losing out on over $900 of your deduction every year. Going cheap, in this case, costs you big time!
Okay, say, for the free download, you think you can deal with that annoyance. It’s time to consider the real issue with apps and why most business professionals should avoid them.
“But we have GPS and WiFi,” the designers tout. "All the important elements for a legit tracker, right?”
WRONG! When it comes to mileage tracking apps, they all have one critical flaw that no software designer can ever address:
How are they legitimately able to know when you are driving? They don’t!
Apps, all apps, are guessing when you drive! And it’s your mileage deduction that takes a hit when they are wrong.
Some apps claim to have solved the problem of guessing when you are driving with some techy-sounding features. Keep in mind, these “features” are really just hacks to try and make better guesses. Plus they still require you to have the app running in the background of your phone 24/7, which will eat up your battery life. If your phone crashes during the day and you forget to reopen the app, too bad. If you turn the app off because it’s killing your battery, then forget to turn it back on, too bad.
Most mileage tracking apps try to guess when you are driving by looking at how your GPS signal is moving. When it detects a certain speed, say 5mph, it will says, “well, I guess you are driving now,” and it begins recording a mileage log.
In order to guess when you are moving, the app is always, and we mean ALWAYS, using your GPS. “Am I moving now? Am I moving now? Am I moving now? Am I moving now?…”
Result: This wrecks havoc on your phone’s battery and makes all your other apps run slower.
Some apps say they are more accurate because they connect to a bluetooth sensor that you leave in your car (which you have to purchase separately). Your phone will hopefully connect with it every time you get in your car, so it takes out the guesswork of when you are in your vehicle.
All the above issues lead to one point that can’t be put into dollars and cents:
You truly need to ask yourself how much extra would you pay for something you know is going to be there for you, all the time, even if you forget about it. Forget accuracy, forget the extra time you spend, and focus on this idea. “If I knew the car was tracking itself without me needing to do anything, how much is that worth to me?”
The reason we mention this is because there are other tools that can give this to you.
Once you start using a mileage tracker, you’ll realize that just having a GPS path where you drove isn’t enough. In fact, not by a long shot. Remember, the IRS requirements for a valid mileage log include identifying which trips are for business, and having the business purpose set for each trip. You’ll want an easier-than-easy way to add these details to your log. The problem is, most people don’t realize this until after they’ve made a purchase.
Most apps just filter your trips into an excel type spreadsheet with no tools to assist in auto-filling your log. It’s worth about as much as you paid for the app. You end up having to sort through each trip manually to decipher which miles were for business, and you will need to add details to ensure the log is fully IRS compliant. This makes apps’ reporting process only somewhat less burdensome than when you did it by hand. By no means are apps hassle-free.
When it comes down to it, even the best apps suffer from the fact that there is absolutely no foolproof easier-than-easy way to allow you to identify a business trip while you are driving. And because of that, you will have to go back over your log to identify identify business trips, which results in TWO SERIOUS COSTS.
Because apps can’t offer a foolproof way to identify business trips while you are driving, you will end up having to dig through your log to find those trips. And guess what? You won’t catch everything and you'll fail to claim recorded trips that were actually driven for business.
While that’s fun enough, you’ll likely also end up claiming trips that weren’t for business, which greatly increases your risk of being penalized if you are ever audited.
How long does it take to fix your log? Nobody remembers to do this on a daily basis, so at best you are trying to fix 2-3 days worth of driving. Most people will not be this diligent, and it’ll be a week or more - maybe even months. Even if you can go back and catch everything, this is your valuable time being wasted on something that is a complete pain in the butt.
True Cost of mileage tracker = Price of Tracker over time + MISSED deductions per year + Labor Involved over time.
We’ve already shown that apps have a HUGE risk of missing miles, costing you thousands in missed deductions. They are also more labor intensive than other options on the market in both the logging and reporting process. But there is also one additional cost hiding out there: the fees app designers charge for using their software.
On the surface, the price of an app seems minimal compared to a physical tracker. By not designing and manufacturing hardware, the designers are theoretically passing their savings on to you. They average between $2.99-$10 for their basic package, but then they nickel and dime you for every other feature.
For the apps that use bluetooth, their fees are higher. Some lull you in with a free download, but will only give you a limited number of trips before they charge you. In one case, unlimited trips were only available at $59.99 per year. Not so cheap anymore, huh? Over the course of your mileage logging needs, these fees quickly add up.
Your app fees fall in the range of $20 per year. Because of all the reasons stated above, you missed logging a ten-mile trip every other day (1,825 total miles in a year). That equates to $1,022 in lost deductions (or $358 actual dollars not coming back from your return)!! Without adding in your labor costs, this app has already cost you $375+ per year.
Remember that cost/benefit ratio? Apps are ideal for those who aren’t driving for work constantly. If you are logging only 1,000 miles per year for business, your actual dollar deduction is about $200. This doesn’t justify buying a higher end tracker. If you miss trips, it isn’t so labor intensive to manually add them back in. Plus, your risk of audit is lower, so having moderately inaccurate logs is less of a concern.
But for those of you who drive more, those who need to squeeze as much from their mileage deduction as humanly possible, there is a MUCH better solution.