Why Keep a Vehicle Mileage Log for Tax Purposes

Many taxpayers overlook this tax deduction, because they think record keeping is too difficult and isn’t worth it.

If you use the same personal vehicle for most of your business use, the IRS has a new program which basically requires you to maintain a a vehicle-use log for ALL uses of your vehicle, for only 90 days. The IRS will accept that time as a snapshot of your driving patters for the full calendar year.

Since 90 days is one-fourth of a year, if you keep a log for “a typical 90-consecutive day period”. This is the wording within the Tax Code. The mileage used for business-use documented in the 90-consecutive day period, may be multiplied by four, to create your annual allowable deductions.

Task to Maintain Vehicle Mile Log

The task of keeping a mileage log is simple and easy. First download a Vehicle Mileage Log Form, make multiple copies and place in a binder. When you get into your vehicle, before you start your engine, start a mile log entry by placing two pieces of information in your log; the date and your starting point. When you get your destination, record your destination the purpose of the trip along the total miles driven.

The primary reason for starting a new month on a clean or separate page is; What if your 90 days selection is not the largest number of miles traveled within that year. By, keeping the log annually, you can either take the actual years worth of travel miles or hand pick the heaviest miles in any 90 day period. By starting each month on a separate log page you can easily break down this information.

Simply keep a Vehicle Mileage Log in your car and each time you start your engine, start the the mileage log entry.

What About Personal Miles vs. Business Miles

What about going shopping trips and other personal errands? Often there are ways these miles could become tax-deductible.

Here is a simple but effective example:

You need to go shopping to purchase a graduation present for your niece. The location is a shopping mall with other stores and vendors you use within your business. With a little advance planning, you can make this trip primarily for business. For example, if there is a office supply store in the mall, and you need to get some office supplies, you could go to the mall to pick up your office supplies. While you’re there, get your niece’s gift.

This mileage would be deductible if a business purpose was your primary reason for the trip and shopping was a secondary purpose of your trip. The secondary purpose is not recorded in your vehicle-use log. If there are two purposes for a specific trip, which one is primary reason? The Federal Tax Courts have ruled that you the tax payer gets to make that determination.

In the above example, you could substitute any reasonable and necessary business purpose in place of the office supply store example.

A trip to the mall for only personal reasons produces a 0%t tax deduction. A trip to the mall for a business purpose, produces 100% tax deduction. Placing the two errands within a business trip purpose give you a 100% deduction.

Sometimes the answer will be “no”, sorry you can deduct those miles. But you’d be surprised at how often the answer is “yes”, you can deduct these miles.