If You Claim IRS Mileage Rate Deduction: Keep a Log! If you drive your car for work and your employer doesn’t reimburse you, then you’re probably looking to take an IRS mileage rate deduction when you do your taxes. No problem, the IRS handles these deductions all the time, it’s perfectly fine. One thing to know is that you should keep a written log of your business miles driven.
To Claim the IRS Mileage Rate, You Must Document Your Driving
In fact, if you don’t keep a written log of your business miles, the IRS can disallow your mileage deduction partially or even altogether. Some people drive a lot for business, and there are people who stand to lose $10,000 or even more if they don’t substantiate the claims they make for the IRS mileage rate. Even if your mileage deduction is denied and you go to court, don’t count on being able to write up a log after the miles were driven.
There are court cases where the defendants created written logs after mileage deduction was denied and these cases went to court. No go, said the IRS! Mileage summary must be entered at the time the miles were driven. Denied! The IRS is very good at winning travel deduction cases. Especially when the defendant doesn’t keep proper records. What’s needed is called proper substantiation.
Your mileage rate substantiation is especially important. In addition to a written log of your business miles driven, keep all your receipts as well. You may have guessed but there are some handy tools for keeping records of receipts, too. There’s a service called Shoeboxed which allows you to take a picture of a receipt and upload it to your own receipt account, where they will store it and digitalize it for your tax records. Way cool.
How to Keep an IRS Mileage Log for Your Business Mileage Deduction
You should keep a notebook in your car. Or get an app for your phone, even easier. There are already at least a dozen out there, just search on mileage tracker, trip log, business expense tracker app etc.
- You will need to record the number of miles driven for each particular trip
- You will need to write down the time you drove
- You will need to record your destination
- You will need to record the reason for driving these miles (business purpose)
These records will help you prove that your business miles were not for commuting. Miles you drive to commute to work are not tax deductible. You cannot apply the IRS mileage rate to commuting miles. Keep good records and you will be able to prove you drove your miles for business.
When you multiply your miles by the standard IRS mileage rate of around $.55 per mile, they really add up to a nice tax deduction. For more on the IRS mileage rate visit the IRS website page called Car & Truck Expense Deduction Reminders. Floyd Davis CPA IRS Publications