Tracking Business Mileage the Right Way
· RKube Services
What a mileage log needs to include, why commuting doesn't count, and how to choose between the standard mileage rate and actual expenses.
Here's a conversation we have every spring. A client says they drove "about 15,000 miles for work" last year. We ask for the log. There isn't one. There's a rough memory, some calendar entries, and a lot of hope.
Vehicle expenses are one of the most commonly questioned deductions, and the IRS is specific about what counts as proof. Early August is a good checkpoint. The year is more than half over, and if you haven't been tracking, you can still reconstruct the first seven months from your calendar while it's fresh and track the rest properly.
This post is for self-employed people and business owners. Employee mileage follows different rules.
What a Mileage Log Actually Needs
The IRS expects records made at or near the time of the trip. That's what "contemporaneous" means. A spreadsheet built from memory next March is much weaker than a log kept as you go.
For each business trip, record:
- Date
- Destination (where you went, not just "client meeting")
- Business purpose (who you met or what you did)
- Miles driven
Also record your odometer reading at the start and end of the year. That gives total miles, which you need to work out business-use percentage.
A mileage-tracking app that logs trips by GPS and lets you tag each one as business or personal is the easiest way to do this. A notebook in the glove box works too. What matters is that the entries are made close to the time and are specific.
Commuting vs Business Trips
This is where most logs go wrong. Driving from home to your regular place of business is commuting, and commuting isn't deductible, however far it is.
What generally is deductible:
- Driving between two work locations (office to a client site, one job site to another)
- Driving to a temporary work location away from your regular workplace
- Errands for the business, like the bank, the post office, or picking up supplies
- If your home office is your principal place of business, trips from home to clients, vendors, and other business stops
That last point is why a qualifying home office matters for mileage too. Without it, the first trip of the day from home often looks like a commute.
Standard Mileage Rate vs Actual Expenses
There are two ways to calculate the deduction.
The standard mileage rate is a per-mile amount the IRS sets each year. You multiply business miles by the rate. It's meant to cover gas, maintenance, insurance, and depreciation. Business parking and tolls are deductible on top of it. The IRS publishes the current rate on its standard mileage rates page, and it changes, so check it rather than relying on last year's number.
The actual expense method totals what the vehicle really cost you: gas, oil, repairs, tires, insurance, registration, lease payments or depreciation. Then you multiply by business-use percentage. It takes more recordkeeping, but it can come out ahead for a more expensive vehicle or one with high business use.
Timing matters. If you own the car and want the standard rate, you generally need to use it in the first year the car is used for business. After that you can switch to actual expenses in a later year. If you start with actual expenses and claim accelerated depreciation, you can't switch to the standard rate for that car later. For a leased car, if you choose the standard rate, you have to use it for the whole lease.
Worked Example
A self-employed electrician's log shows 18,000 total miles for the year, 11,000 of them business. That's about 61% business use.
His actual vehicle costs for the year:
- Gas: $3,400
- Insurance: $1,800
- Repairs and tires: $1,300
- Registration: $200
- Depreciation: $2,800
That's $9,500 in total. At 61%, the actual expense deduction is about $5,800.
Under the standard method, the deduction is 11,000 miles × the IRS rate for the year, plus business parking and tolls. We'd compute both and compare, keeping the first-year rule in mind if this is a new truck.
Now suppose he didn't keep a log and can only document 6,000 miles from invoices and his calendar. The deduction shrinks by almost half, under either method. The log is worth more than the choice of method.
Source: IRS Publication 463, Travel, Gift, and Car Expenses
How RKube Helps
- We review your log mid-year and flag trips that look like commuting.
- We run standard vs actual each year and track which method each vehicle is locked into.
- We keep vehicle expenses categorized in your books so actual-method totals are ready at year-end.
- For S-corp owners, we set up mileage reimbursement through an accountable plan.
If you want your vehicle costs organized before tax season, start with our free 30-day bookkeeping trial or call (984) 234-7030: https://rkubeservices.com/campaign
Final Thoughts
A good mileage log isn't complicated. It's just consistent. Pick an app or a notebook this week, rebuild January through July from your calendar, and keep it going through December.
This is general information. For your specific vehicle and business setup, talk to a tax professional.
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