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 on reporting business mileage on your tax return.
Reporting Business Mileage For Taxes
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:
- The date you placed your car in service for business purposes
- The total business miles you drove during the year
- The total commuting miles you had during the year
- The total miles you drove when you weren’t on business or commuting
- Was your vehicle available for personal use during off-duty hours?
- Do you (or your spouse) have another vehicle for personal use?
- Is there evidence to support this deduction?
- If yes, is the evidence written?
What Does The IRS Require For Business Mileage Deductions?
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:
- Your mileage
- The dates of your business trips
- The places you drove for business
- The business purpose for your trips.
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.
This post is meant for general information purposes. Please consult your tax professional before filing any returns.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.