If you use your car for your job, self-employment, or volunteer purposes, you may be able to deduct the cost of your mileage on your taxes. To do this, you must keep a record of your mileage. Consider using our template to track your mileage. Keeping organized records to substantiate your expenses is essential.
There are a few different reasons why you might want to track your mileage.
Specific Situations When You Should Track Your Mileage
- Employment: If you use your car for employment-related purposes, such as driving on overnight trips, visiting clients, or running errands, your employer may reimburse you for your mileage.
- Self-employed: If you are self-employed and use your car for business purposes, you may be able to deduct your mileage expense from your business income.
- Volunteer, Medical, and Moving: If you volunteer for a non-profit organization, have high medical expenses, or move during the year, you may be able to deduct your mileage on your taxes.
The IRS recognizes a standard mileage rate of 65.5 cents per mile for business miles driven in 2023. If you drive 100 miles for business, you can submit mileage logs totaling $65.50 to your employer for reimbursement. Your $65.60 reimbursement is not includable in your taxable income as long as your employer has an accountable plan.
The same mileage rate applies if you are self-employed, or you can deduct the actual cost of operating your car, including gas, oil, repairs, and depreciation. However, if you choose to deduct the actual cost of operating your car, you must keep detailed records of your expenses.
The difference between tracking mileage when you are self-employed vs employed, is that you are keeping records for your business taxes instead of a reimbursement from your employer. Either way, keep clear records in case of an audit.
Volunteer, Medical, and Moving Mileage
Volunteer miles can be deductible if you are driving to a charitable organization. The rate is lower, at $.14 per mile, and you need to be itemizing your deductions.
Similar to volunteer miles, in some cases, medical and moving mileage can be deductible at $.22 per mile.
The rules governing these types of mileage are complex and ever-changing. If you are not sure, track your mileage throughout the year. It is much easier to keep records as you incur expenses instead of putting them together as you complete your taxes the following year.
Tips for Tracking Mileage
- Keep 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 app. There are many different mileage tracking apps available, both free and paid. These apps can make it easy to track your mileage and generate reports that you can use for your taxes.
- Keep your records in a safe place. You will need to keep your records for at least three years in case the IRS audits your return.
- Make sure your records are accurate and organized.
If you follow these tips, you will be well on your way to tracking your mileage and saving money on your taxes.