About your odometer and your $1,000s of tax deduction

October 11, 2020

An odometer or odograph is an instrument used for measuring the distance traveled by a vehicle, such as a motorcycle or a car. The device may be electronic, mechanical, or a combination of the two (electromechanical).

Most odometers work by counting wheel rotations. It assumes that the distance traveled is the number of wheel rotations times the tire circumference. The formula is (actual distance traveled) = ( (final odometer reading) – (initial odometer reading) ) * (actual tire diameter) / (standard tire diameter).

Usually even new cars have a few miles in them, indicated by the odometer. This is called delivery mileage, which is the limited number of miles on a new, unregistered vehicle because of transportation to the vendor, between businesses, or from the vendor to the buyer.

Odometer reading, mileage

What does it mean for your taxes?

You can deduct ordinary and necessary expenses you have when you travel away from home on business. You may be able to deduct car expenses as well as if you use your car for business purposes. And those expenses can add up to several $1,000s per tax year.

If you deduct travel or transportation expenses, you must be able to prove certain elements of expense. If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined.

In all cases, mileage logs are enough evidence to support your business mileage deduction claim. Your mileage logs should contain your annual odometer reading at the beginning of the year. However, we recommend recording them monthly to justify the tracked mileage you put in your mileage log.

If you don’t know your past odometer readings you can calculate them by using our Past Odometer Reading Calculator. You only need to know your very first and current odometer reading and the actual fuel consumption of your vehicle.

From that, you can easily calculate how much your past odometer reading could have been. For example at certain refuelings / chargings or at the end of the month!

Making a mileage log or making up for a mileage log retrospectively can seem like an easy task, once you have figured out your past odometer readings.

Still, there are 70 logical conflicts you have to pay attention to when recording data for your mileage log. The MileageWise web dashboard and mileage tracker app monitor these conflicts to make sure that all of our customers will have an IRS-proof mileage log in just 7 minutes a month!

Both the web dashboard and the app will alert you to record your odometer reading at the end of every month, and at every refueling.

If you still can’t find 7 minutes at the end of the month to create your mileage log, outsource the task of keeping your mileage log to us!