Tracking mileage could be a hassle since the IRS requires very specific information. But when you use a mileage log and you set-up a tracking system, it isn’t that hard to do. Plus, your effort will yield quick savings. Remember that these savings are rightfully yours as you have worked for them but for you to get back the money, educate yourself on the tax codes because they have very strict limitations on mileage deductions claims.
Mileage Log Templates
The importance of a mileage log
First things first, you need to know what mileage means before you can start using a mileage log. You can define mileage in several ways, depending on its application. First, it could refer to the allowance for travel expenses at a certain rate per mile or an aggregate length.
It can also refer to the distance in miles, such as the total miles traveled, especially in a given period of time. Mileage can also refer to the amount of service that something yields, especially as expressed in terms of miles of travel. For businessmen who engage in a lot of travel, this could be very important in terms of savings benefits.
But many business owners make mistakes in tracking their mileage without a mileage log template which might prove very costly. Others don’t even use a vehicle mileage log to track mileage at all. They consider this task a waste of time and effort.
Businesses and employees who want to deduct their mileage on their taxes know very well that they should present records like a mileage form or a mileage logbook to support those deductions. Making a simple estimate isn’t enough to present to the IRS when claiming deductions.
As a matter of fact, the tax-collecting agency meticulously scrutinizes mileage deduction claims and a lot of people get audited because of this. If you want to make a claim, you better track your mileage properly using a mileage sheet or a mileage tracker form to avoid any inconvenient audit.
Small businesses are most likely to get audited because most of them are under sole proprietorship and as such, the owners usually don’t have the manpower and time to document their mileage properly. As a rule, the IRS requires owners to support mileage claims by presenting adequate records that would prove the date, location, business purpose, and amount.
The court won’t allow deductions for a vehicle’s business use unless the taxpayer can show evidence on a mileage report such as:
- The amount of expenses
- The place and time of the trip
- The official purpose of the trip
Simple Mileage Logs
Keeping track of and claiming mileage on tax returns with a mileage log
The IRS allows deductions on mileage when you use your own vehicle for the purpose of business and when you record all of the information on a mileage log template. This may apply to workers who fall under the 1099 classification, including those who are self-employed, freelancers, and owners of small businesses.
Included on a vehicle mileage log as mileage deductions are trips that involve meeting clients, picking supplies up, driving between branches, and so on. According to the IRS, a mileage form or a mileage sheet should include details about:
- Your mileage.
- Business trips dates.
- Places you went for official business.
- The official purposes of your trips
Aside from these inclusions, the agency also needs to know how many miles you drove all throughout the year for commuting, business, and other official tasks. Keeping track of all this information on a mileage tracker form could be very taxing. But the best way that you can prove how much mileage you used for your business is by keeping a mileage logbook.
You can track your mileage by using an app for tracking mileage or by making a mileage report. A mileage log effectively provides the information that the IRS asks for. On it, you can track, log, and calculate your mileage each time you took a trip and make sure that it can stand up to the scrutiny of the IRS.
Does this mean that you can apply for mileage deductions on tax returns? It depends. For instance, self-employed people can deduct mileage from their taxes, whereas W2 workers can’t. Many people ask questions about what exactly does the IRS accept with regards to evidence of mileage.
The required documentation can fall under different names such as mileage log, vehicle mileage log, mileage log template, mileage form, mileage sheet, mileage tracker form, mileage report or a mileage logbook. Whatever it’s called, the IRS accepts digital versions as well, provided they contain the required information.
It’s recommended that taxpayers maintain their digital sheets for at least five years or so after filing for a deduction. Physical mileage logs might easily get misplaced or lost which might create problems in the future.
Printable Mileage Log
Using your mileage log for your taxes
An employee who must drive to work can apply for a mileage deduction on his federal income tax return if he meets certain defined criteria. Also, individuals can take advantage of this opportunity, provided they document their travels in a mileage log. They should prepare this to provide evidence on how they calculated deductions.
If a person can meet these requirements, the taxpayer may benefit from it by having a reduction in his income tax. Here are some pointers for using your mileage log template for taxes:
Check the qualifications for mileage deduction
Before you can enter information on your mileage log for a possible deduction, there are certain qualifications that you must meet to receive the benefits. Here are some instances where you can apply for a mileage deduction:
- travel from your office to a different worksite
- travel from your office to another place of work
- driving to official errands
- trips made when you meet with clients
- visiting clients for business
Determine the calculation method
There are two options of accounting to choose from when calculating for the amount of mileage deduction. Both vary from each other as one doesn’t require maintaining a mileage log. For the Standard Deduction, you need to keep a log for qualifying the mileage driven.
But if you want to use Actual Expense Deduction, you must diligently keep all of the receipts and other documentation relevant to charges for your vehicle throughout the year.
Record your odometer at the start of the tax year
This is a requirement of the IRS. You can document this data on Form 2106. For vehicles that aren’t new or if you purchased it within the year, you must record the reading of the odometer starting on the very first day you used the vehicle.
Maintain a Driving Log
Maintaining a mileage log to keep track of the miles you have driven is necessary if you choose the standard mileage deduction. The IRS is very strict in requiring the maintenance of specific information. Otherwise, you might get disqualified from taking such deduction.
You should record the vehicle’s odometer reading in the mileage log at the beginning of each qualified trip as well as listing the trips’ starting location, purpose, date, and ending location. At the end of your trip, record the final reading of the odometer.
Subtract this value from the one you got at the beginning to get the total mileage of the trip. You should also keep in mind that the vehicle mileage log must be properly maintained and in a timely manner. Estimating or rounding off figures is not permitted.
Keep a record of the receipts
The actual expense deduction method will not require maintaining a mileage form. Instead, you must keep the copies of all relevant documentation and receipts. Make sure that each document includes the date, the amount paid, and any other information relevant to the actual goods or services.
Record the odometer reading at the end of the tax year
You should record the odometer reading at the end of the tax year. Together with the beginning of the year odometer reading, you can use the end-of-year reading to calculate the total mileage you drove your vehicle for the whole year. Write down this information, which should include the percentage driven for official business purposes, on Form 2106 by the IRS.
Record your mileage on the tax return
Write down the total miles you drove on Form 2016 at the conclusion of the tax year. You can derive this figure using the year’s standard mileage rate to solve for the deductible amount.
As an alternative, you can use the actual expense deduction method. In this case, you should organize your receipts of actual expenses into categories including oil, gasoline, repairs, insurance, depreciation, and vehicle rentals.
Retain all documentation
It’s a recommended practice to retain all documentation relevant to mileage deductions for a minimum of three years. This becomes essential should the IRS requests these to verify the calculations for mileage deductions.
Furthermore, you should also keep a copy of your records before sending them to the proper taxing authorities. Another good practice to minimize losing information is maintaining a separate log for each tax year.