The distance traveled in miles is known as mileage and for a vehicle, mileage is the number of miles traveled per one gallon or liter of fuel. This information about mileage is a useful information for different reasons such as tax deductions or reimbursement purposes. To keep a track and record of mileage, a mileage log or mileage logbook or mileage tracker is used.
These mileage logs can help you save through the mileage deduction. This can be done by deducting the mileage of business trips from the total mileage on your personal vehicles. Internal Revenue Service (IRS) has listed the trips that are considered business drives which include mileage for meeting with clients, picking up supplies/inventories, traveling to and fro to an office, etc.
IRS also has requirements for the information that needs to be included in the mileage logs. Those requirements are:
- Total mileage through odometer reading
- Dates of business trips
- Places drove for business
- Business purposes of trips
To fulfill IRS requirements and to make record-keeping easy, many mileage tracking applications, such as MileIQ, are available. Such applications or available templates track, log and calculate the mileage for each drive. Information in these templates can be recorded easily and without hassle. In addition, these mileage logs can prove to be helpful when IRS wants to scrutinize the business mileage.
Usually, for a tax deduction or reimbursement purposes, the mileage log is maintained on a monthly basis and this log is referred to as a monthly mileage log. It records the miles a vehicle has been driven in a month. This monthly mileage log has various benefits for drivers such as:
- To keep track of mileage for own records
- To keep track of mileage for IRS purposes
- To claim deductions on tax returns
- Could be used as a fitness guide of the vehicle or to know when are different mechanical tasks required for the vehicle such as oil change, etc
A monthly mileage log, hence, could prove to be a beneficial tool for a tax deduction. However, this can only happen if it is up to the requirements of IRS. There are many common mistakes that people overlook when managing monthly mileage logs which results in them not attaining any tax returns. Some of those mistakes are:
- Not stating the business purpose of the trip started as a business trip
- Using estimations rather than exact calculations
- Errors or negligence in stating or calculating miles or other information in the log
- Not stating sufficient information
Therefore, it is very essential to avoid mistakes and provide sufficient information to obtain tax-related benefits. There is another concept of contemporaneous mileage log which is what IRS wants the drivers to maintain. In this type of log, the records need to be kept on a daily or at least on a weekly basis. The reason behind is that IRS needs enough information to grant tax deductions.
Preview
File Format: MS Excel [.xlsx]
File Size: 45 KB
Download