Is it really necessary to keep a mileage log?

Is it really necessary to keep a mileage log and what is the best way to do that?

Tom was recently audited by the IRS and the largest deduction on his tax return was business mileage. The agent requested a mileage log which Tom did not have. He attempted to recreate the documentation for business mileage and then was allowed only half of the originally claimed deduction.

The point: not keeping a mileage log will cost you tax dollars.

The IRS requires documentation to support a deduction for auto expense claimed on the tax return. This is true whether you claim actual expenses (i.e. gas, insurance, repairs, tires, etc.) or mileage. Either way, a mileage log is the best way to ensure your deduction will be upheld under audit.

There are two common approaches to keeping a mileage log. One is by keeping a notebook or calendar in your vehicle and daily documenting miles travelled. The second is simply keeping the calendar in your office up to date with location of appointments for which you can then go back and pull up the mileage. There are also digital logs available online if this is your preference. Each person will likely want to customize the way they keep a mileage log depending on how they do business.

Key items to note in the log are:

  1. Beginning of year and end of year odometer reading
  2. Daily commuting miles. These are not deductible but do get reported on the tax return
  3. Business trips: include the date, destination, # of miles, and the business purpose for each
  4. Medical mileage: include date, destination, # of miles and medical purpose
  5. Charity mileage: include date, destination, # of miles and charitable purpose

It is also advisable to keep all receipts for auto expenses as these will further substantiate the log you have kept. It will also allow your tax preparer to determine if actual expense or mileage results in a higher deduction.

Parking receipts should also be kept as parking is deductible in addition to standard mileage rates as well as actual auto expenses.

The standard mileage rates for 2016 are listed below:


Rates  (Cents per Mile)