If you’ve got mileage on the mind, you’re off to a good start. These days, tax deductions can be tricky, especially if you are self-employed or a small business owner. But thanks to mileage tracking and other tax-deductible car expenses, drivers are making the most of their taxable income. As might be expected, you can’t claim a mileage deduction without sufficient records. But what does the IRS specifically require in your documentation? And how can you make the process easier of tracking mileage as a business expense? We’ll set the record straight on all your IRS mileage log inquiries below.
A mileage log is a spreadsheet or written logbook that keeps track of the number of miles you drive for business purposes. It’s super important to maintain these records when you take a standard mileage deduction versus the actual expense method. That is to say, the IRS doesn’t care how you keep track of miles, as long as your documentation checks out. In the past, many drivers relied on a paper mileage log that required the use of handwritten notes. It’s easy to see why this practice often led to errors and disorganization. Luckily, now every driver can make use of automatic mileage tracking with MileIQ.
In short, the answer is yes. The IRS doesn’t tell you how to log mileage, but you will need proof. Using a mileage tracking app is one of the easiest ways to provide what the IRS wants. With digital mileage sheets, you don’t have to stress about information getting lost or damaged. The cloud keeps all your records safe for when you need to access them. But no matter which type of mileage log template you find useful, it’s important to know what the IRS wants to see.
Your mileage log must be able to demonstrate the following details:
Not everyone can claim mileage on taxes, which is important to note. W2 employees are not eligible to take a mileage deduction anymore. Most get compensated by their employers through a mileage reimbursement program. For 1099 workers, which includes freelancers, independent contractors and self-employed professionals, the possibility to earn big on your tax return is more substantial. In any given year, you can deduct mileage on taxes using the standard mileage rate deduction.
Keeping track of mileage is made simple with the technology of MileIQ. Our highly-rated mileage tracking app automatically measures, logs and calculates your mileage for each day you drive for business. With affordable pricing options, all eligible drivers can give mileage tracking a chance and see the direct financial benefits of a mileage deduction. Once you’ve downloaded the app, you can start tracking your business miles (and personal miles too). It works like this: While you drive from your office to a client meeting, the app will run in the background and precisely track total distance traveled. By the time you arrive at your destination, you simply swipe to classify the drive as “Business”.
Until you know the ins and outs of mileage logging, it's possible you could encounter a tax mistake that warrants IRS scrutiny. Failure to track mileage only puts you at a disadvantage when tax season arrives. Trust us, you don’t want that! Without accurate reporting, you’ll be asked to give an oral testimony and hand over any receipts, emails, or invoices as proof. Not only does this make filing your deduction more time-consuming and difficult, there is no guarantee that the IRS will let things slide.
Bottom line: If you didn’t keep track of mileage this year, we hope this information better prepares you for the next tax season. Don’t let another year go by without a mileage deduction. Download MileIQ today and enter your odometer reading to begin!