How to Track Your Mileage for Business Taxes (and Save Money)

If you use your car for business purposes, you may be able to deduct the cost of your mileage from your taxes. To do this, you will need to keep a record of your mileage. There are a few different ways to do this.

Use a Mileage Log

One way to track your mileage is to use a mileage log. A mileage log is a simple form that you can use to record the date, purpose, starting location, ending location, and odometer readings for each business trip. You can find mileage log templates online or at most office supply stores.

Use A Mileage Tracking Spreadsheet

Another way to track your mileage is to use a mileage-tracking spreadsheet template. There are many different templates available, both free and paid. These spreadsheets can make it easy to track your mileage and generate reports that you can use for your taxes. Combined with the TripTally add-on, you can calculate mileage inside your spreadsheet using only the beginning and ending locations. You don’t need to track odometer readings or look up mileage after your trips.

Mileage tracker spreadsheet template
Mileage Tracker Template

Retain Your Records

No matter which method you choose, keeping your records in a safe place is essential. You will need to keep your records for at least three years in case the IRS audits your return.

Here are some tips for keeping your mileage records accurate and organized:

  • Start tracking your mileage as soon as you start using your car for business purposes.
  • Record each business trip’s date, purpose, starting location, ending location, and odometer reading. Remember, the odometer reading is only needed if you’re not using an add-on like TripTally.
  • Keep your records in a safe place.
  • Make sure your records are legible and easy to understand.

If you follow these tips, you will be well on your way to deducting the mileage costs from your taxes.

Additional Tips for Deducting Mileage

  • You can only deduct mileage from ordinary and necessary expenses of traveling away from home for your business, profession, or job.
    • An ordinary expense is common and accepted in your trade or business.
    • A necessary expense is helpful and appropriate for your business.
    • An expense doesn’t have to be required to be considered necessary.
  • You cannot deduct the mileage you use to commute to and from your usual place of work.
  • The IRS allows you to deduct a standard mileage rate which changes frequently.
    • Alternatively, you can deduct the actual cost of operating your car, including gas, oil, repairs, and depreciation.
    • If you choose to deduct the actual cost of operating your car, you will need to keep detailed records of your expenses.

By tracking your mileage and keeping accurate records, you can save money on your taxes. In addition to business driving, there are other situations for which you can deduct mileage.