How to Keep Vehicle Mileage Tax Records

Tax law requires adequate records when deducting business use of your vehicle. Logging mileage and expenses contemporaneously will save more tax dollars and headaches than you could possibly estimate.

Difficulty: Moderate

Instructions

Things You'll Need:

• Odometers
• Calculators
• File Folders
• Notebooks
• Pens With Pocket Clip
• Tax Preparation Software
• Trip Odometers
• Calculators
• Notebooks

Getting Started

1. Get a notebook and a pen with a pocket clip. Clip pen to notebook.

2. Designate a readily accessible spot in your vehicle for the notebook and pen.

3. Write in the notebook the odometer reading of your vehicle every January 1 ' or the odometer reading on the date you begin using the vehicle for business.

4. Label a file folder, "Vehicle Expenses," and write on the folder the current year.

5. Designate a handy place to keep the file folder. The glove compartment is a possible location.

Recording Mileage and Expenses

6. Write down the date, the number of miles driven and the business purpose for each business errand or trip, in one section of notebook.

7. Continue to add each trip to the list.

8. Write down all expenses paid for operating and maintaining the vehicle, in another section of notebook.

9. List the date, the amount paid and the type of expense such as gasoline, oil change, car insurance, car wash, repairs and auto club membership. This is optional, but you may be able to claim actual expenses if the deduction is greater than the standard mileage rate.

10. Save your receipts in the file folder.

11. Log parking fees incurred for business purposes and the dates paid, in a third section.

12. Save parking receipts in the file folder.

13. Log separately the dates, names of work-related classes taken and miles driven directly from your work location to class. If you attend class on a nonworkday, log mileage to and from class.

14. Note the round-trip commuting distance you travel from home to your place of business, if you are an employee or if you have a fixed work location away from your residence.

15. Keep records of any mileage or vehicle-expense reimbursements you may receive from your employer or clients.

Totaling Mileage and Expenses

16. Subtract beginning odometer reading from ending odometer reading to obtain total mileage for the year.

17. Add up the business miles driven during the year.

18. Add up the miles driven to classes.

19. Add up the vehicle expenses paid during the year.

20. Add up parking fees paid.

21. Calculate the number of days worked during the year and multiply that number by the round-trip distance to and from work.

22. Add up reimbursements for mileage and vehicle expenses received during the year.

23. Use these totals when preparing your income tax return, or give the figures to your tax preparer.

24. Save your notebook with your tax papers for at least three years.

25. Transfer the new January 1 odometer reading to your new notebook.

Tips & Warnings

• If your employer has a policy of reimbursing you for mileage and you do not ask him or her to do so, you cannot deduct these miles on your tax return.
• If your employer pays you less than the standard mileage rate, you may claim the difference.

[ashtonbyrne]

on 9/11/2009 OR! You can invest into an automated solution that does everything for you. Simply plug it into your PC and filter as you please.

http://www.quino.ca/mileage-logging

[lvscats63]

on 8/10/2009 I have been a Tax Professional for over 20 years now, and the most effective deduction for vehicle deductions is to compare the deductions for mileage, wear and tear on your vehicle, etc. and the standard deduction. I have found that the one that gives the best deduction is the standard deduction where you input the starting mileage and the mileage used for your business. My clients lose out on a bigger deduction by using the breakdown of mileage, wear and tear, gas, etc.

[only25bucks]

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[manuelfernandez]

on 1/2/2008 Great article. I struggled with this for years until I found this GPS gadget that does it all for me without software. You really should check it out. www.mileagelogger.com

[61244]

on 6/4/2007 I was told by a tax professional that I do NOT have to do this, that rather it's from home-to-home:

If you deviate from a direct route to handle personal affairs, deduct the additional miles driven from the total miles before logging in notebook.

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