Keeping a mileage log is important if you use your personal vehicle for business purposes, as it can help you claim a deduction for the expenses related to the use of your vehicle on your tax return. You can claim on average $12,000 in deductions every year.
Are there any specific IRS regulations or requirements for keeping a mileage log?
Yes, the IRS has specific regulations and requirements for keeping a mileage log. If you use your vehicle for business purposes, you can deduct the expenses related to the use of your vehicle on your tax return. To support your deduction, you need to keep a record of your business mileage.
According to the IRS, a mileage log must include the following information for each business trip:
- The date of the trip
- The destination of the trip
- The purpose of the trip
- The starting location and ending location of the trip
- The total mileage of the trip
- The business-related activities that were conducted during the trip
The mileage log should also include the make, model, and year of the vehicle that was used for the trip.
It’s important to note that the IRS requires that you keep a contemporaneous record of your mileage, which means that you should record the information at the time the trip occurs or shortly thereafter. The IRS does not accept estimates.
Finally, it’s a good idea to keep receipts and other documentation related to your vehicle expenses, such as gas, repairs, and insurance, in case the IRS requests them.
What are the consequences of not keeping a mileage log for business purposes?
The amount of the fine for not keeping an accurate mileage log depends on the specific circumstances and the discretion of the IRS. The IRS may impose fines and penalties for failing to keep adequate records, including mileage logs, to support tax deductions.
The penalties can range from a few hundred dollars to several thousand dollars, depending on the severity of the violation and the amount of taxes owed. The IRS may also charge interest on any taxes owed as a result of disallowed deductions.
For example, if you are audited by the IRS and found to have claimed a deduction for business mileage without adequate documentation, the IRS may disallow the deduction and impose a penalty. The penalty can be up to 50% of the amount of tax owed as a result of the disallowed deduction.
In addition to penalties, not keeping an accurate mileage log can also result in increased audit risk, legal fees, and reputational damage. It’s important to keep a detailed and accurate mileage log to avoid these consequences and ensure compliance with IRS regulations.
Are there any mobile apps or software that can assist with maintaining a mileage log?
Yes, there are several mobile apps and software programs that can assist with maintaining a mileage log. Among these, MileageWise is one of the most comprehensive and voted by many as the most user-friendly mileage tracking app available.
MileageWise is a mileage tracker app available on Google Play and App Store that is designed to help business owners, self-employed individuals, and employees track their mileage for tax and reimbursement purposes. The app is available on both iOS and Android devices and offers a range of features to make it easy to track mileage, generate reports, and ensure compliance with IRS regulations.
One of the standout features of MileageWise is its automatic tracking function. The app uses GPS technology to automatically track and log your miles for taxes, making it easy to capture all of your mileage data without the need for manual input. The app also includes features such as geofencing and automatic classification, which allow you to set up custom rules for your trips and automatically categorize them based on your preferences.
Another key feature of MileageWise is its reporting functionality. The app allows you to generate detailed mileage reports that can be used for tax purposes, expense reports, or reimbursement requests. The reports can be customized to include a variety of data points, such as start and end locations, trip dates, the purpose of the trip, and total mileage. The reports can also be exported in a variety of formats, such as PDF, Excel, or CSV.
MileageWise also includes a range of other features that make it a powerful tool for tracking and managing your mileage data. These include the ability to manually enter trips, the ability to track multiple vehicles, the ability to track fuel and other expenses, and the ability to sync data across multiple devices.
MileageWise is a top-notch mileage tracking app that offers a range of features to make it easy to track and manage your mileage data. The app’s automatic tracking function, custom rules, and reporting functionality make it a standout choice for anyone who needs to track their mileage for tax or reimbursement purposes.
