A mileage log can be defined as a thorough record of the distance or mileage driven in each vehicle for business purposes. Most companies require their employees to record mileage weekly or monthly, but these records don’t usually suffice for an IRS audit. The IRS necessitates an indistinct view of your total operating expenses, which includes your mileage. To achieve this, you need to record mileage for every specific trip. This sounds tedious. But given the right tools, such as a telematics system, you can quickly achieve it by automatically recording this information and storing it in a centralized database.
What Counts as Deductible Mileage?
The most likely eligible candidates for deductible mileage are self-employed individuals who use their private vehicles for work-related business. Employees may also be eligible for deductible mileage if their employers do not reimburse them at the IRS standard rates. Nevertheless, no taxpayer can deduct mileage for commuting to work.
The following are some of the most common types of business vehicle use that count as deductible mileage:
- Traveling between temporary job locations
- Visiting clients
- Trips between offices
- Drives for errands and picking up supplies
- Trips to the airport, train station, or bus station for business travel
- Customer meals and business entertainment.
Note that particular variables may impact how a deduction needs to be claimed, such as whether a work location is within your local home area or if the travel includes an extended overnight stay. Make sure to consult with a tax accountant or check with the current IRS regulations to ensure your deductions are correct and allowable.
Benefits of Business Mileage Log
Individuals and business record mileage due to several reasons, including:
- For tracking business mileage for a tax deduction
- Reimbursing employees for their vehicle expenses using a cents-per-mile rate
- Compensating employees for the use of fuel or prove the use of a fuel card
- Substantiating business use of a company-issued vehicle to avoid taxing employees and assist the company to cancel reimbursements as a business Expense.This documentation may also be used to keep track of other deductible miles, such as travel for medical appointments, work for charitable organizations, or when employees are moving.
Why Do You Need Your Mileage Log?
If you strongly desire to deduct mileage expenses on your current taxes, you need to have documentation of your mileage done the right way. This implies that you should utilize a mileage log of some kind.
The IRS dictates that mileage records must be comprised of:
- Mileage driven
- Dates of the business travel
- Location drove
- Purpose of the trip
Keeping track of mileage daily and maintaining correct records is very important for a business or an employee in case of an audit. A mileage log can be of any kind, for instance, a spreadsheet or an online application that allows you to keep track of your miles.
What Information is Required to Claim Mileage Deduction?
If you want to claim mileage deduction from your employer or if you are a taxpayer and you want to reduce your taxes in a year, you must provide the following information to support your claim. The information required is as listed below:
- Your car and track expenses total: You can find this by multiplying your business miles by the standard mileage rate for the given year.
- Your total commuting miles, per vehicle, per year
- Your annual business miles per vehicle
- All other non-commuting, individual miles per a given vehicle
- The odometer readings of your vehicle at the beginning and end of the business trip
- Any other business parking and toll expenses related to business travel: Remember to include this amount to your mileage deduction.
Mileage Tracking Tips
Documenting and keeping track of mileage is essential and doesn’t have to be tedious or boring. Here is a compiled list of a few tricks to help you generate an easy process while maintaining accuracy.
- Calculate mileage daily: Make it your daily routine so that your records are detailed, accurate, and to ensure that no detail is accidentally overlooked. This is especially important if you are audited.
- Use online maps as a backup: People make errors, and mileage apps can have their issues. If you use your vehicle and forget or lose your mileage information, look up the route via google maps to estimate the total number of miles traveled, and print a copy for documentation.
- Safely store your mileage records: Consider using digital storage versions that are safe and easily accessible. This is because the IRS recommends holding onto mileage logs and supporting documents for at least 3 years; thus, digital records are recommended.
- Keep a paper log copy in your car: Having a hardcopy of your mileage log may serve as a backup if technology fails or if you think of a note during your trip that you want to include to your digital log later on.
- Always aim for accuracy to avoid missing out on deductions and the full reimbursement amount you are entitled to.
Mileage Log Templates
Many drivers and employees who use their vehicles for work prefer to create their mileage sheet using excel or spreadsheets. When using this method to create a business trip log, it is crucial to ensure that your information is accurately captured, detailed, and IRS mileage log compliant. Ensure that you record all the trips you take, how many miles you covered, the location you went, and the date you traveled. It is also advisable that you track your trips to make it easier to tally the number of business miles you covered over the year. However, this doesn’t have to be overwhelming. Our free Mileage Log Templates provides an accessible, fast, and straightforward format for you to list all of this information. Download our free templates today and customize them to your preference and make your work exciting and easy.
It is almost impossible to avoid work-related travel. However, the good news is that you can manage it- and most importantly, ensure that you get compensated for mileage and other related business travel expenses. One significant way of achieving this is by staying updated on the numbers of your odometer and credit card readings. Another critical element is staying organized, using free Mileage Log templates that are readily available online to help track and manage your work-related travel, resources, budget, and other project details in real-time. Remember, a well-kept mileage log can positively impact anyone, be it salespersons, service workers, self-employed individuals, or anyone who spends most of their time traveling for their job, as those miles translates into money either as reimbursement from employers or as deductions from the IRS.