IRS Mileage Log Requirements
Before we get into the various methods available for tracking mileage for taxes, let’s first take a look at the IRS’s requirements for an acceptable mileage log. Naturally, these are important because without recording all of the following details, your mileage log may lead you to a world of hurt with the IRS.
- Your odometer readings at the beginning and end of each year: it is a myth that you need to track your readings more often – the IRS only requires that you do it on a twice-yearly basis.
- The distance of each trip: each trip you do matters – this is usually recorded simply from the various places that you stop, or simply your destinations – whether they are personal trips or business trips.
- The total distance of each trip: you need to be precise – each trip should have the total miles driven for that trip.
- The date of each trip: again, you need to be specific here, it’s no use having an approximate idea of when you did a particular business-related errand or attended a business lunch.
- The purpose of your trip: while it might seem inconsequential to some, the purpose of your trip is an absolutely essential element. Partly because you can only receive tax back on the mileage you do for business, charity, moving, or medical purposes, and partly because the IRS expects a certain percentage of your trips to be personal (for example when you are commuting to and from work), and they may mark your log as suspicious if it doesn’t incorporate at least 10% of your overall mileage as personal.
Finally, while not a requirement, it is certainly useful to have an idea of what kind of deduction you could receive on any business mileage you do. The IRS’s standard mileage rate for 2022 is 58.5 cents, which means if you do a total of 30,000 business miles every year, then the standard mileage deduction you should receive is $17,550. Financial planner Port Macquarie proffers you with the finest services of all time.
Additionally, many apps show you your potential deduction while you’re on the move, for example when you arrive at a destination. We’ll explore more on the apps and software available for mileage tracking a little later.
For now, let’s take a look at another scenario where tracking your mileage is essential: mileage reimbursement.
We would be remiss to not cover this broad and important topic. Mileage reimbursement deals with any situation involving employees driving vehicles for business purposes for work, and it is particularly important because the situation is much the same as we’ve outlined in this article – employees need to log their mileage using either a template or a mileage tracker app.
There are many different aspects to mileage reimbursement, with the main difference being that employers may choose how they reimburse their workers for the miles they drive. Let’s examine a few examples:
The Standard Mileage Rate
Many employers simply use the standard mileage rate of 58.5 cents per mile driven for reimbursement, though they may choose rates, which are higher or lower. In the case that they choose a rate higher than 58.5 cents per mile, any excess is considered taxable income.
Some employers choose to implement a fixed amount that is intended to cover all vehicle-related costs and is typically paid on a monthly basis – this is called a car allowance. This does tend to be a little less common these days, as some consider it to be exploitative to employees, but it is an option nonetheless.
This acronym stands for fixed and variable rates, and that’s exactly what it entails. A fixed amount is paid for fixed costs, and a variable cost-per-mile rate is chosen for miles driven. This variable cost is always much lower than the standard mileage rate because that rate incorporates all costs related to the operation of a vehicle in general.
Mileage Log Templates
Naturally, there are those who prefer to use a more retro or old-school method of keeping track of their mileage – this is where mileage tracker forms or templates come into play. The most popular of these is an Excel mileage log template or a Google Sheets mileage log template – both of which you can download for free in a variety of places.
Mileage Tracking Software
These days, the most popular way to create a vehicle mileage log is through a mileage tracking app. It also happens to be the most effective way to do so, and it’s not close. Most of these apps are available on both Android and Apple phones, and they can easily be downloaded via Google’s Play Store and App Store. You may choose to use an expense tracker which tracks mileage as part of a wider package, or – if you’re looking for software that offers the best tracking and features available – you can choose software that specializes in mileage tracking single-mindedly. That’s what we would recommend.
With these points in mind, let’s take a look at the apps available on the market to create a simple mileage log, and hone in on the one that we had the most success with.
The Best Mileage Tracking Apps
While the entire market is a little difficult to cover here, there are a number of providers that should be highlighted. First off is MileIQ, which is certainly the most popular provider out there, boasting a huge user base throughout America. The problem is, however, that MileIQ lacks several features that the more innovative providers show off – giving no option for manual tracking, plus, their free trial period only offers the user a maximum of 40 “drives” or trips.
Other notable providers include Driversnote and MileageWise, both of whom offer Bluetooth tracking, while the latter also offers Plug ‘N’ Go tracking if you simply socket your phone into a USB port inside your vehicle.
Our personal experience was that among these companies, MileageWise’s software was the best. “Why?” You might ask, well, it’s not too complicated – their software has the most features.
Naturally, we encourage you to do your own research, but among their most notable features we found the following:
- Retrospective Mileage Reconstruction: MileageWise is among the two providers that give you the ability to reconstruct your mileage logs for previous years, with the other being ExpressMileage. The issue with the latter is that they don’t actually have an app – just a web dashboard that can only be used from your PC.
- Three Auto-Tracking Methods: most providers offer some kind of vehicle movement monitoring, as we highlighted earlier – Driversnote offers two methods. We would say that MileageWise just slightly edges them out, however, because there are simply more options.
- In-built IRS Auditor: Only MileageWise makes this feature possible, which it does by using AI-based software that reviews and corrects 70 logical conflicts – allowing you to create a printable mileage log that is 100% IRS-proof.