The IRS has tight guidelines for what types of driving can be deducted from taxes. Many business owners are allowed to deduct the expenditures of their vehicle, as well as repair bills and mileage driven.
What is a Mileage Log?
You must keep detailed records of your driving in order to claim deductions on your tax returns. Many people keep track of their time on a weekly or monthly basis, which will not satisfy the IRS if your records are audited. The simplest approach to keep track of your mileage is to utilize a mileage log template, which includes sections for you to enter your mileage for each trip. Because there isn't a clear distinction between driving for business and other travels, the IRS has been known to invalidate some deductions.
Contents of a Mileage Log
You'll need a record of the vehicle's mileage at the start of the year, as well as a record at the conclusion of the year. To guarantee that the distance is correct, this should match the quantities that are logged each day.
Each time you start your drive to a business destination, make a note of the following information.
- The business trip's start date.
- The starting place of the journey. It could be a workplace or a construction site.
- The final destination of your journey.
- The purpose of your journey.
- The vehicle's initial mileage.
- That trip's mileage has come to an end.
- Tolls and other expenses incurred throughout the journey.
Each journey, as well as the beginning and ending miles, must be recorded at the end of the day to assure accuracy. After you've used these documents for deductions, the IRS requires you to keep them on file for three years.
Types of Business Driving That Qualifies
Getting from one office to another or from one job site to another
You can deduct the mileage you go from one job site to another. You can deduct the mileage between two offices as a business driving expense if you spend your time between them.
Stops for errands and supplies: You can deduct the cost of driving to the bank, post office, or supply store off your taxes each year. When you take these side journeys on a daily basis, the miles can soon pile up. If you're a contractor, you can deduct the cost of loading the vehicle with supplies as well.
Entertainment for Business: You can deduct the mileage for each time you meet with a customer over coffee or go out to dinner with a prospective new client.
Traveling by Airport: You can deduct the kilometers you drive to the airport for trips as expenses. You can also deduct the cost of your return flight from the airport following your business trip.
Odd Jobs with No Relationship: Because babysitting, landscaping, and concierge work can be classified as a company, you'd be able to keep track of your travel to these tasks as a business cost.
Sites for Temporary Employment: Contractors and other staff are frequently transferred from one place to another in less than a year. Mileage discounts may be available if you drive to these temporary job sites.
Looking for New Work: You can deduct the miles you drive to interviews if you're looking for a new job in your current industry. This isn't the case for a new job in a new field.
Visits by Customers: When you meet with customers in their office or on the job site, you can take advantage of the normal mileage deduction.
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