How To Keep Track of Mileage for Taxes

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How To Keep Track of Mileage for Taxes

If you use a personal car for business purposes, you could could be in for a large tax deduction at the end of the year. The mileage deduction can put thousands of dollars back in your pocket but be sure you know how to keep track of mileage for taxes.

How To Keep Track of Mileage For Taxes: What’s Required

The IRS has a few audit red flags for tax returns. The mileage deduction does receive some scrutiny because many people like to abuse it. If you ever have to face an IRS audit, you’ll want to have a mileage log that meets the IRS’ requirements.

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The IRS says your mileage log must include:

  • your mileage
  • the dates of your business trips
  • the places you drove for business, and
  • the business purpose for your trips.

The IRS also requires you to record the odometer readings only at the beginning or end of the year. Note: you don’t have to include an odometer reading for every single trip. The IRS will also want to know all your business, commuting and personal drives.

The best way to keep track of mileage for taxes is to have a contemporaneous mileage log. That means the records are created each day you drive or soon after. Recreating a mileage log once you learn you’re being audited won’t fly with the IRS.

For many years, a paper mileage log was how to keep track of mileage for taxes. This required a lot of discipline because you’d have to write down every start and stop of your trip, as well as all the other needed information.

The problem is that, well, people are human beings. You always start off with good intentions and log miles but then life gets in the way. It’s tough to remember to write down miles if you’re running late, if you’ve just coming off a fight with a loved one or even if there’s a great song playing as you’re parking.

A paper mileage log doesn’t offer much security either. If you lose that log, your miles are gone.

As computers and GPS technology emerged, tracking mileage for taxes became a little easier. An Excel spreadsheet with all the required information—as long as it’s generated contemporaneously—is generally considered acceptable.

But this also represents problems. Most using these methods wind up logging their miles twice: writing in the paper log and then inputting in a computer later. That’s a lot of time devoted to busy work instead of to growing your business or enjoying your life.

A mileage tracking app like MileIQ is an easy answer for how to keep track of mileage for taxes. It creates an automatic and contemporaneous mileage log for all of your drives.

It saves those records securely in the cloud, so you never have to worry about losing it. Additionally, those records can be pulled up or printed out years later if you ever have to face an IRS audit.

Download MileIQ to start accurately tracking your miles »

Marin Perez

Marin Perez

Marin has been writing about how technology improves lives for about a decade. He's excited to see how entrepreneurs are using tools like MileIQ to be more successful. When not working, he's thinking about his next trip.
Marin Perez

MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.