Tracking Business Mileage to Comply With the IRS
Running a business often entails frequent commute and travels for meetings with customers, the office to project sites, and other business errands. Most businesses run plenty of errands and in a year, these miles add up considerably. The Internal Revenue Service (IRS) allows business owners who operate a vehicle for business to deduct the mileage as expenses. Mileage also comes into the picture when the vehicle is used for charity, medical or moving purposes. In 2021, the deductions per mile suggested by the IRS are:
- $0.56 for business use,
- $0.14 for charity
- $0.16 for medical uses and for moving
While it is not mandatory, taxpayers can utilize the mileage allowance to assess the cost of owning and operating the vehicle for tax-deductible purposes.
Why do you need a mileage log?
To claim tax deductions, your business needs to maintain meticulous records of the mileage driven. While many businesses record the driving on a weekly or monthly basis, this may not meet the requirements of the IRS when the records are audited. The frequency of audits for business mileage has risen in recent times.
The IRS requires businesses to maintain detailed documentary evidence of the mileage. The information the IRS may look at when auditing your business mileage for tax deductions include:
- Date of the business travel/commute
- Your starting point
- the destination
- Purpose of the commute/trip
- the starting mileage of your vehicle
- Vehicle’s ending mileage
- Trip related costs such as tolls
The best, and easiest, way to accurately record the mileage is to use a mileage log. With plenty of mileage log templates, mileage log websites, and apps available, it can be difficult to know which one to use to keep accurate records. The cheapest way to record your miles is to write them down in a notebook or paper. While this method is inexpensive, there are risks of misplacing the book or paper, forgetting to record a drive, and entering the wrong date or drive details.
Mileage log options
There are other mileage log options that help streamline your record-keeping and minimize errors.
A mileage log spreadsheet eliminates the need for manual calculations and can be opened and used on your smartphone. Calculations become easier on spreadsheets but you will still have to manually record the drive each time that can make your entries error-prone.
The basic mileage log
A free mileage log template will best serve the needs of businesses, particularly startups and small businesses that prioritize cutting down on expenses. pdfFiller offers a free, printable version of the mileage log template with ample space for recording the most crucial details including:
- Preparer’s Initials and Date
- Reviewer’s Initials and Date
- Date of driving
- Beginning Odometer
- Ending Odometer
- Business Miles
- Business purpose
- Miscellaneous expenses and notes
- Driver’s Initials
With a slew of PDF editing tools, pdfFiller makes it easy to fill the columns, edit the document, add a digital signature, print, share and email the mileage log. You can download the free printable pdFiller mileage log here.
Other free mileage log templates
There are multiple other options when it comes to free mileage logs. TemplateLab has 30 different types of free mileage log templates in Word, PDF, and Excel formats that are easy to use. Some websites also provide a mileage calculator along with a free mileage log template.
While there are plenty of mileage tracking apps available, look for ones that offer standard reporting, automatic tracking, and security. With automatic tracking, there is no need for you to manually start or stop the tracking of drives. The downside can be that some apps are expensive as compared to spreadsheets or manual log templates.