How To Keep a Mileage Log
The Internal Revenue Service (IRS) says you must keep accurate records of business expenses, including for business automobile expenses. This is true whether you choose to claim the deduction using the standard mileage method or the actual expenses method. The following details should be recorded in your log book any time the vehicle is used for business purposes:
DateDestinationBusiness purpose of your tripVehicle starting mileageVehicle ending mileageTotal miles drivenVehicle expenses, type (gas, oil, tolls, etc) and amount
Sample Paper Mileage Log
Mileage log books are usually available at office supply stores or you can make your own. You can use the example from the IRS below to create your own in a spreadsheet or word processor.
Automatic Mileage Tracking
Manually entering trip information in a log book is tedious, particularly if you make a lot of business trips. Fortunately, there are several mileage tracking applications available for Apple and Android smartphones that make use of the phone’s GPS to keep track of every mile driven for business purposes. These apps will log your business trip information and enable you to download a mileage summary on your tax return. Some of the more popular mileage tracking apps include:
MileIQ: IiS and Android Mileage Expense Log: iOS only TripLog: iOS and Android QuickBooks: Mileage tracking is included with QuickBooks Self-Employed
Business Use vs. Personal Use
The IRS is vigilant about excessive claims for business use of personal vehicles, claiming most or all of your vehicle mileage for business use may attract extra scrutiny from the tax authorities and a possible audit. Therefore, when it’s time to claim your motor vehicle business expenses, you will need to know how many non-business-related miles you drove. This can be easily accomplished by determining the total miles you’ve driven in a year by comparing your vehicle’s odometer reading at the end of the tax year to what it was at the beginning of the year. Once you have your data for the year, to calculate your motor vehicle expenses claim, you need to tally all of the miles you’ve driven for business use over the course of the year. Your personal use is then the total mileage for the year minus the business mileage.
Business Use vs. Personal Use for Employees
Employees who use company vehicles must also keep track of mileage driven for business purposes versus personal use mileage. Mileage driven for personal reasons is a taxable benefit that has to be included in employee income. Note that mileage driven to and from a regular place of employment—other than to the location of a business call—is considered commuting and is classed as personal use. Make sure you have a clear policy on the personal use of company vehicles, including:
Who can drive the vehicle, such as the employee only or spouseWhat is allowable for personal use, for example, using a company truck to tow a camper or boatHow to keep accurate mileage records
The Bottom Line
Keeping good records of business expenses is important for accuracy at tax time, and for ensuring you claim all the deductions you’re entitled to. Whether you track your business use of a car in a simple paper logbook or a smartphone app, make it habit to jot down the details as you go.
