If you claim mileage for your business, your mileage log is your most important tax document!
Do you claim auto expenses for your business on your taxes? If the answer is no, you should probably skip this blog post. If the answer is yes, this is exactly the post you want to be reading.
I do a lot of audit work. Lots of audit work. Every audit that I’ve ever worked on where the taxpayer claimed mileage the IRS asked to look at the mileage log. Every single one! Small business owners are more likely to get audited than wage earners and most small business owners claim mileage. So—if you’re a small business owner, you need a mileage log.
So here is your new mileage log.
All you have to do is fill it in with the miles and the appointments. It’s all set up and formatted as an Excel spreadsheet. There’s even room for other auto expenses in case you’re using your actual costs instead of mileage.
Did you know that you have to keep track of your miles even if you are claiming your actual expenses? It’s true. Often, people come to me with their auto receipts and I can’t do anything for them without their mileage. Whether you claim mileage or actual expenses, you must have a mileage log.
In order to do your mileage log correctly, you’ll need your odometer reading from the beginning of the year and from the end of the year. I like to take my readings on New Year’s Day during the Rose Bowl Parade. I started 2012 out with 81 miles on my car (I got a new car at the end of 2011.) Now I’m up to 8903. I should reach 9700 by the end of the year. Of those miles, about 5,000 of them are for business.
If I’m claiming straight mileage, I would take the 5000 miles times the 55.5 cents per mile that I’m allowed to claim for a deduction of $2,775. (The mileage rate for 2018 is 54.5 cents per mile.)
If I’m claiming actual expenses, then I’d take the 5,000 business miles I drove and divide that by the 9610 actual miles I drove during the year to get the percentage of my expenses that I could deduct. 5,000 divided by 9610 = 51.98%. So I’d total up all my gas and maintenance expenses and figure the depreciation and multiply that all by 51.98% to get the right dollar amount.
So you see, you can’t claim your actual expenses without having the mileage to figure the percentage.
Feel free to use it. Copy it. Give it to friends. It’s okay. We left the year off so that you can use it for multiple years if necessary. We’d like you to use it when you have us do your taxes, but if you use someone else’s, that’s okay. You can always use our mileage log. The point is that it is very important to have a mileage log for your taxes that we don’t care who uses it. It’s free. We’re not even asking you to sign up for anything.
If you’re claiming auto expenses on your tax return this year, you need to use a mileage log. If you don’t already have one, here’s one for you.
Hi Joshua,
I checked out your link. I think that’s a cool device.
Hi Jan, these are very helpful tips. However, I found a device here which is an automated way of logging the traveled mile. I think it is better than manually logging car mile for IRS mileage rate deduction. What are your thoughts on this?