I am always looking for ways to improve my life and the lives of my clients. One of the common pain points that I run into with clients is tracking their mileage for business. They hate keeping up with their mileage, but it is something that they need to do. But just estimating an amount of business miles for the year is not enough.
The IRS requires that taxpayers keep a mileage log to track their business mileage. If the IRS ever examines a taxpayer, it is pretty strict in its documentation requirements. If the log does not satisfy the IRS, they could disallow the mileage deduction in its entirety, increasing the tax due and perhaps adding penalties.
The mileage log should include the starting and ending odometer reading for the year. It should also be contemporaneous, which means that you record entries each day. Each trip listed on the log should include:
- The date of the trip.
- The starting point and destination.
- The business purpose.
- The mileage of the trip.
I hate keeping up with my own mileage. I would always forget to write it down. I have tried several methods. In the old days I used a manual log and would then transfer it to a spreadsheet. After I got a smartphone I tried a couple of different apps. Recently I have found the best solution so far. It is an app called MileIQ. You download the app to your phone from the App Store or Google Play. It automatically tracks your trips; you don’t have to remember to start or stop it at the beginning and the end of each trip. After the trip is over you swipe to the left if it is personal or swipe to the right if it is business. You fill in the business purpose. The app calculates the mileage and the value of the trip. It will also prepare reports for your records. You can try it for free. The first 40 drives each month are free. If you like it, the monthly price is $5.99; the annual plan will be even less per month. Give it a try and let me know what you think. I think that it is a great solution for those of us who don’t like to keep up with our mileage. Please let me know if you have any questions about this or any aspects of your tax return or business.
Remember the mileage rate for 2015 was 57.5 cents per mile for business. Because of the decrease in fuel prices, in 2016 the rate has gone down to 54 cents per mile.