IRS Mileage Log Requirements

how to track mileage for irs

The cost of driving your car as part of doing a job is a deductible business expense according to the Internal Revenue Service. If your employer doesn’t compensate you for using your car on the job, you can write off the expenses on your taxes. Either way, the IRS only allows a business mileage claim when you document it with a record of work-related driving.

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Mileage Reimbursement: How It Works

Employers that reimburse mileage typically use the IRS standard rate or a figure close to it. The IRS sets the standard rate annually based on what it costs to operate an average vehicle, including gasoline, maintenance, insurance, licenses and depreciation. The standard rate in 2015 was 57.5 cents per mile. Since this rate factors in the usual expenses of driving, you don’t have to keep track of detailed costs. All you need is a mileage log that conforms to IRS requirements if your employer pays the standard rate or a lesser amount.

Taxes and Business Mileage

You can only claim job-related driving on a mileage log. A trip that starts from your work location qualifies. However, you can’t do personal errands while on a business trip, and your regular commute from home to work and back isn’t considered business travel. If you have a home office, then the miles you travel between it and your regular work location are eligible. Employers do not include reimbursement amounts paid at or below the standard rate in your taxable compensation on W-2 forms, so it’s tax-free money. However, an employer can pay more than

the standard rate. When an employer chooses to pay more, the extra amount is taxable compensation and must be added to your wages and other compensation.

Keeping a Log

The IRS doesn’t prescribe a format for mileage logs – what’s important is the information. You can buy a logbook at an office supply store or use a form provided by your employer. For an annual mileage log, record the odometer reading on January 1, or the first day you use a vehicle for business driving, and then record the reading on December 31. For each business trip, write down the date and what the odometer says at the beginning and end of the trip. Record what the trip was for and where you go. says log entries should be written down when you make each trip -- not at a later date.

Business Driving as Tax Deduction

If you don’t receive reimbursement for work-connected driving, or you are paid less than the standard rate, you can write off unreimbursed amounts on your taxes as long as you keep an accurate mileage log. You also have the right to use actual vehicle expenses instead. If you elect to do this, you must keep gas receipts, repair invoices and records of insurance, interest on car loans and all other expenses. You still need a mileage log and you can deduct only the portion of the cost of operation attributable to business use. For instance, if 40 percent of your annual mileage is work-related, then you can deduct 40 percent of operating expenses on your tax return.


Category: Taxes

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