You’ve arrived at the right article if you want to learn how to use a mileage log to track business mileage. If you use your car for work-related purposes, you may wonder how much of its maintenance cost you can write off.
The IRS understands that every business wants to cut costs to increase profit. This is why business mileage deduction on taxes is allowed.
Having understood how to use a mileage log to track business mileage, you’d know you need to keep a record of your business trips. This includes the date, distance, and purpose of business trips.
Then you record the number of miles driven. Afterward, calculate your weekly or monthly expenses while on those trips. This entails keeping receipts for gas and car maintenance expenses.
In this piece, you’d learn how to use a mileage log to track business mileage. So, when you get to tax time, you can easily use the mileage log to calculate tax deductions.
Before we get into how to use a mileage log to track business mileage, we need to first explain what business mileage is. Business mileage accounts for the distance you drive for work-related purposes.
These could be client meetings, job site visits, or office supply store trips. But here’s where it gets tricky. If you’re driving from your home to your regular place of work, that doesn’t count as business mileage. This is because you can’t expense your daily commute.
Now, let’s talk about some not-so-obvious examples. Let’s say you’re driving to pick up lunch for the team during a meeting – that counts as business mileage!
Or if you’re running errands for your business during your time. It could be dropping off a package at the post office or picking up supplies on the weekend. That also counts as business mileage.
Calculating your business mileage is pretty simple, and you can use a few methods. One way is to use a mileage log. To do this, simply record your trips’ beginning and ending points and add up the resulting mileage.
Then, you can add the miles driven for all your business-related trips over a certain period. This could be weekly or monthly to get your total business mileage.
Another method is to use a GPS tracker or a mileage-tracking app on your phone. These tools can automatically track and calculate your mileage, reducing the stress of manual logging.
Let’s say the total miles driven on business trips at the end of the year is 250 miles. Using the 2023 business mileage rate of 65.5 cents per mile, your business mileage deductible would be calculated as follows:
250 ÷ 0.655 = $381.67.
You have two options when calculating your expenses while driving for business. The first option is the standard mileage rate the IRS sets (usually updated yearly). Other costs, such as fuel, maintenance, repairs, and insurance, can be estimated separately. Determining which approach will work best for your company is up to you.
Maintaining an accurate mileage log for business purposes is a vital task requiring careful attention to detail. This piece on using a mileage log to track business mileage wouldn’t be justified without discussing it.
Keeping a mileage log in your vehicle is a great way to keep tabs on how much time you spend on the road. Every time you drive for business purposes, record your trip’s date, starting point, and destination.
You should also include columns for your trip and the number of miles driven. This information will be crucial when it comes time to calculate your tax deductions for business-related driving expenses.
Another method is to use technology to track your business mileage. There are many mileage-tracking apps and GPS devices for this purpose.
They can automatically track your trips and calculate your mileage for you. However, it’s crucial to verify the precision of these tools and keep a backup record.
Your business’s needs and available resources will determine which mileage-tracking app is ideal. Some notable business mileage tracking apps include Zoho Expense, Everlance, QuickBooks Online, and Rydoo.
Zoho is great as it gives you an all-in-one solution. In comparison, you’d choose QuickBooks online if you’re an independent contractor or freelancer. However, if you’re interested in keeping tabs on your miles and receipts, Shoeboxed is the best option.
Tax mileage reimbursement is why business mileage tracking is a thing for business owners. Once you record and calculate the expenses from each trip, the amount can be used to get reimbursed from taxes.
Keeping tabs on how much gas you use for work is a crucial part of budgeting for your company. This is why this article on how to use a mileage log to track business mileage is incomplete without mentioning it. Here are some steps to help you track your gas mileage effectively:
This is the first step in tracking your gas mileage for business. It will help you determine how many miles you’ve driven for business purposes.
To do this, you note how much gas you’ve purchased, the date of purchase, and the cost per gallon. This will help you keep track of all expenses per gas purchase.
Here, you divide the number of miles driven by the number of gallons of gas used. This will give you your miles-per-gallon (MPG) rating for that trip.
To do this, you can create a simple spreadsheet. Also, you can use a mileage-tracking app to record your gas mileage for each trip.
Over time, you can use your gas mileage data to identify trends and adjust your driving habits. For example, if your gas mileage is lower than usual, you may do one of these. You either get your car serviced or adjust your driving habits to improve fuel efficiency.
It’s impossible to overstate the tax and financial benefits of accurate mileage tracking for a business owner. Keeping track of your journeys and the distance you cover is essential for this. You can use a notebook or a mileage tracker app like MileIQ, Everlance, or TripLog to record your business trips.
When recording your mileage, include the date and purpose of each trip. As a small business owner, mixing up personal commutes and business trips is easy.
You’d want to avoid this, especially if you’re working from home. Also, you should note your vehicle’s starting and ending mileage for every business trip. This will help you track why you were travelling and make it easier to categorize your expenses.
For each trip, categorize it as either personal or business. Then make sure to note down the purpose of the trip for business-related travel. This information will be helpful when calculating your mileage deductions and preparing financial reports.
At the end of the year, you can use your mileage tracker to calculate your mileage deductions for tax purposes. Multiply your total business mileage by the standard mileage rate (m) to get your total deduction.
Finally, keep all your mileage records in a safe and organized place. You want to find and reference them easily when filing your taxes. It would also make your work easier when preparing financial reports.
To log mileage for taxes, you should keep a detailed record of all your business-related trips throughout the year. This can be done manually in a mileage logbook or using smartphone apps and GPS mileage tracking devices.
For each trip, record the date, starting and ending odometer readings, and the purpose of the trip. You’d also want to record the total number of miles driven. Now, make sure to only include business-related trips and not personal ones.
The following is a simple way to fill out a mileage log.
To maximize tax deductions and increase business revenue, it’s crucial to understand how to use a mileage log to track business mileage. The above piece will guide you through business mileage calculations.
However, you should note that the business mileage rate changes every year. Therefore, it would be great to research this rate before calculating your mileage deductibles on taxes.
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The business mileage rate for 2023 is 65.5 cents per mile. This is on the condition that the taxpayer records only trips made for business purposes. That is, all personal commuting is excluded.
The business mileage rate for 2022 is 62.5 cents per mile. This was an increase of 4 cents from 2021 which was 58.5 cents. However, the IRS would verify the mileage log before approving reimbursement from taxes.
Yes. The CRC requires taxpayers to keep a mileage log to claim deductions for vehicle expenses on their taxes. By keeping an accurate and detailed mileage log, taxpayers can support their claims for tax deductions and reduce their tax liability.