We often talk about tracking your mileage and expenses for tax purposes. But, what are you supposed to do with it?
Let's go over the basics of reporting business mileage on your tax return.
If, like many self-employed workers, you are a sole proprietor, your business income and business deductions will be reported using the IRS Schedule C, Profit or Loss From Business along with your personal tax return.
Line 9 will contain the category for car and truck expenses. Because many people try to abuse this deduction, the IRS requires more details.
For business mileage on your Schedule C, the IRS wants to know:
You can satisfy that last requirement by making sure you're keeping an accurate mileage log. The IRS doesn't require you to submit the mileage log with your return to get the deduction, though.
Instead, you'll need the mileage log book in case you get audited down the road‚ that's why it's a good idea to keep your mileage logs for at least five years. The IRS requires your mileage log includes a record of:
You'll also want to log your business vehicle's starting odometer reading. You only need the starting reading, though. The IRS does not require you to log your odometer reading for every business trip during the year.