Surprisingly, not everyone is aware of the fact that they may be eligible for a mileage tax deduction for all the business miles driven. Furthermore, even fewer people know how to keep a simple mileage log and what to do if the IRS does not accept the mileage log they hand in to the IRS as a mileage tax deduction claim.
We’ll tell you just what to do in this case, but let’s start at the beginning:
Why it’s important to keep a good mileage sheet for tax purposes
Businesses use mileage logs to keep track of the miles traveled for work-related activities.
Are you a sole proprietor?
If you work for yourself, you can deduct certain expenses from your taxable income. Tip: you can use our Dashboard to build mileage logs for retrospective mileage deduction for prior 3 years.
Are you an employee?
If you’re an employee and your employment requires you to drive frequently, you are likely to get paid a certain amount per mile to cover fuel costs and vehicle wear and tear. In order to prove that, you will often be required to keep your mileage reporting game as thorough as it gets.
Either way, it is crucial to keep a mileage record, even if it will take some effort to set it up, it’s well worth it in the long run.
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But why is keeping a mileage log really worth it?
Benefits of keeping a good mileage log
Claim your money back
It’s paramount to get reimbursed for any travel expenses you incur for business. Unless otherwise specified, travel that is done while on the job is often referred to as work-related travel rather than travel to and from the workplace.
By keeping a powerful yet simple mileage log, you can be transparent about how much fuel you use for work and ensure that you are paid appropriately.
Protect yourself
Fraud allegations do occur. Maintaining a record of trips conducted for professional purposes will protect you in the case of a fraud charge involving travel claims.
The only method to support your claim and have the money recognized as authentic is to keep a mileage log.
Get reimbursed
For every business-related mile you drive, you are supposed to get mileage reimbursement. It can either be in the form of car allowance, cost-per-mile (which is tax-free up to the IRS federal mileage rate), or FAVR (Fixed And Variable Rates), which is the combination of the former two: a monthly flat rate plus a cost-per-mile reimbursement rate that both parties have agreed upon.
How much can I deduct per mile?
With the help of the mileage deduction or as a business expenditure, your mileage log book can result in considerable savings. The standard mileage rate in 2024 saw an increase to 67 cents per mile from 2023. With MileageWise you’re able to save $1,000s a year for each car you have.
Tips for keeping a simple mileage log
- Use a mileage log book app to save time instead of a paper log book or a printable Google Sheets or “Excel” mileage log template.
- If you’re interested in the details on how to keep track of mileage for taxes, read our in-depth article on the topic.
- Don’t miss a day; if you want to be certain that all of your logs are accurate, you should check to see if you have precisely tracked or documented your trips each day.
- Always keep track of your personal travels as you need to be able to demonstrate the proportion of work-related miles to total miles.
- Save your logs for at least 3 years, so that you can be able to give documentation in the event of an audit (which is investigable up to 3 years in retrospect).
- Never be scared to ask questions. Ask an expert, an accountant, or a tax counselor, if there is anything you are unsure of.
- Pay attention to the IRS mileage log requirements: A mileage log is acceptable it contains the miles, the addresses, the dates, and the trip purposes (such as business meetings or personal shopping) for each trip, plus the odometer readings.
You’re good to submit taxes with the IRS if your mileage log has all of these facts and the figures match. By the way:
Does the IRS require odometer readings?
Your mileage log must include the year-starting and year-ending odometer readings. However, it is recommended that you take notes of your current odometer readings on a monthly basis for the sake of easier calculation.
TIP: If you ever need to calculate your odometer readings retrospectively, we’ve got an Odometer Reading Calculator.
But what happens if it’s already too late and the IRS did not accept your vehicle mileage tax deduction claim?
Does the IRS require personal trips?
Although the IRS doesn’t require personal trips in your mileage log, it’s strongly recommended that you include them because it will provide clarity for both yourself and the IRS, since you need to separate your total business mileage, total personal mileage, and total commuting mileage for the year.
Also, logging your personal trips boosts the proficiency of MileageWise’s built-in IRS auditor function, which you need for an IRS-Proof result.
What to do if the IRS did not accept your mileage log
If the IRS does not accept your mileage log, there are several steps you can take to address the situation:
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Understand the Requirements: First, it’s important to understand why your mileage log was not accepted. The IRS requires detailed logs, including the date, miles, addresses, and purposes of each trip, as well as year-starting and year-ending odometer readings. You should also log personal trips for clarity.
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Check for Errors: Review your mileage log for any possible errors. This includes checking for mathematical inaccuracies, missing information, or inconsistencies in the records.
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Respond to IRS Notices: If the IRS finds errors, they typically send a notice of a mileage audit, giving you 30 days to respond. It’s crucial to prepare your paperwork and correct the mileage log to match your claimed deductions.
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Seek Professional Help: If you are not confident in fixing the errors yourself, consider seeking assistance from a tax professional or a service specializing in mileage log corrections. They can help ensure that your revised log meets IRS standards.
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Utilize Mileage Log Software: Consider using software that can help in creating an IRS-Proof mileage log. Some software, like MileageWise checks for potential IRS red flags and helps in maintaining accurate and compliant records.
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Maintain Regular Records: Going forward, maintain a consistent and accurate log of your mileage. Use tools like mileage tracker apps or digital logs that can simplify this process and reduce the risk of errors.
Remember, keeping an accurate and up-to-date mileage log is crucial for claiming vehicle deductions and avoiding issues with the IRS. If you’ve made mistakes in your log, correcting them promptly and accurately is key to resolving the issue with the IRS.
Facing An IRS Inspection?
Facing an IRS audit for mileage can be a daunting experience, especially if the IRS did not accept your mileage log. This scenario often leads to a detailed mileage audit, where every trip and every mile counts.
The key to navigating this situation is understanding the importance of a well-maintained mileage log for IRS audit. When the IRS scrutinizes your travel records during a mileage audit, having a comprehensive and accurate log is your best defense.
In cases where individuals find themselves being audited by the IRS for mileage without a proper log, the challenges multiply. An IRS audit without a mileage log can lead to complicated situations, potentially resulting in penalties or denial of deductions. It’s crucial, therefore, to maintain a meticulous log that meets IRS standards.
If you ever find yourself in a situation where the IRS checks your mileage records and your log is lacking, immediate steps should be taken to reconstruct the log as accurately as possible. Remember, a detailed and accurate mileage log is not just a record-keeping tool; it’s a vital document for tax purposes, especially if the IRS did not accept mileage log initially submitted.
Getting into the details
Both the standard mileage rate and the actual expenses method require accompanying IRS-proof mileage logs in order to be eligible for a car mileage tax deduction. The IRS will want detailed mileage logs if your claim is audited. However, it’s worthwhile because MileageWise subscribers claim $1,000s in annual mileage deductions.
If the IRS finds errors in your mileage log, they usually mail you a notice that you are the subject of a mileage audit, and you have 30 days to reply, if you wish to avoid an enormous IRS fine.
When being audited by the IRS for mileage, you have to prepare your papers if the IRS rejected the IRS mileage log you had submitted. Moreover, you must come up with an IRS mileage log that matches your claimed deductions, regardless of whether you operate a small business, are self-employed, or only drive the vehicle for personal purposes.
What to do if you made a mistake on your mileage log
Have you made “errors in your mileage log” and you’ll be the subject of an IRS mileage audit? Well, you could start examining your mileage log to find the mistakes and try to fix it yourself, but unless you’re a tax professional, CPA, or have a bunch of time to go through it thoroughly, you’re better off entrusting mileage log experts to fix your yearly mileage log.
MileageWise’s Mileage Log Tax Preparation Service is built just for that!
We’ll take care of your mileage log with our guaranteed IRS-Proof software, fixing all mistakes you have in your mileage records.
“What makes MileageWise IRS-Proof?”
MileageWise’s software checks and corrects 70 potential red flags in your mileage log before creating it. These are the same red flags that IRS auditors are looking for when examining your mileage log.
MileageWise consists of a mileage tracker app that has 3+1 automatic recording options to choose from and a web dashboard you can open from your favorite browser.
The web dashboard enables you to import your Google Maps Timeline trips so you can convert them into an IRS-Proof mileage log, as well as gives you the opportunity to edit, assemble, and finalize your trips in just 7 minutes a month…much less than writing all of your trips into your daughter’s notebook, right? 🙂
Download MileageWise’s automatic mileage tracker app from Google Play or the App Store & try it for free for 14 days. No credit card required!
