Mileage Log Sheet: What Must Be Included
Keeping a proper mileage log sheet can be the source of a very good deduction for your small business.
It can also be a nightmare, if all the IRS required information is not included in the that log.
It is so important for you to understand that the tax code has strict limitations on the use of the standard mileage rate.
In the Tax Court case: Royster v. Commissioner, TC Memo. 2010-16 (2010), the court ruled that the taxpayer was not entitled to any deduction for his business miles…
because the taxpayer’s mileage logs “contained entries for only the beginning and ending odometer reading of the vehicle each day.
The logs do not contain any entries regarding the business purpose of the trips or the destination of each trip as required by the tax code”.
Mr. Royster lost three years of business mileage deductions because of his omission. Furthermore, the court held him liable for accuracy-related penalties as he was not able to provide sufficient additional evidence to meet the strict substantiation requirements of section 274(d).
The court emphasized that a deduction is not allowed for the business use of a vehicle unless the taxpayer substantiates:
- The amount of such expense
- The time and place of the travel
- The business purpose
Note this record-keeping requirement goes for the taxpayer using the standard method rate or the actual expenses method.
Mileage Log Sheet Tips:
Here are some tips on maintaining a proper vehicle mileage log:
- Purchase a log or make your own. Here is a free printable mileage log sheet you can print out and keep in a binder or folder. If you would like to keep your mileage in a spreadsheet…here is a free mileage log spreadsheet. Or you can even use a pocket calendar and keep it in your glove box….just make sure there is room to record the beginning and ending odometer reading (can use the last 3 or 4 numbers as long as you have the full odometer reading from Jan 1), the destination and the purpose of the trip.
- Make a habit of recording your odometer reading on January first. You will need it to record your “total” miles on your tax return.
- Make a habit of always recording your mileage even if you have to write it down on the back of your receipt or a scrap of paper. Just make sure you fill in the remaining information when you get home.
- Make sure you have receipts or source documents to verify business miles. See business receipt tracking. I personally note on my mile log sheet if I don’t have a receipt such as: Desired printer out of stock…anything to jog my memory if I ever needed to defend my log.
Note: If you have a home business, you can deduct your mileage from your home to the business destination and back again.
However, If your business is outside of your home, the number of miles between your house and your business is commuting miles and are not deductible. You will need to record the mileage from your business to your business destination and back to your business.
Keeping a logbook is definitely worth the trouble. Even a small numbers of business miles can really add up and save you on your taxes.