How to Log Mileage for Taxes in 8 Easy Steps

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How to Log Mileage for Taxes in 8 Easy Steps

If you must drive as part of your employment, you may be able to deduct the expenditures on your federal income tax return. So, if you’re a mobile financial advisor who sees customers all over town, you may deduct the miles you accrue while traveling for work. You may also utilize the deduction for medical expenses, if you are a member of the military, or if you work for a nonprofit organization.

The guidelines are established by the Internal Revenue Service (IRS), which annually modifies the deductible mileage rate for inflation. So, if you qualify, prepare to record your trips as proof in the event that your taxes are audited.

In this post, we’ve outlined eight simple actions you may take to claim this tax benefit.

Key Takeaways

  • The IRS permits taxpayers to claim deductions for car usage.
  • The normal mileage deduction requires you to keep track of odometer readings at the start and finish of a qualifying journey, as well as its purpose and date.
  • Those who do not want to report mileage may deduct car expenditures such as leasing payments, insurance, petrol, and tolls.
  • You may deduct these costs if you use your automobile for business, medical reasons, relocating active-duty military personnel, or working for a nonprofit organization.
  • Save detailed records if you want to claim the normal mileage deduction, and keep all of your receipts if you want to claim car expenditures.

1. Make Sure You Qualify for Mileage Deduction

As previously stated, certain requirements must be met in order for taxpayers to claim a deduction for miles incurred while driving their automobiles throughout the tax year. The most typical purpose for claiming mileage is for travel from the office to a jobsite or from the office to another business-related location. You may also claim the deduction if you use your car for the following purposes:

  • Run errands for the company
  • If you claim medical costs, we will drive you to and from your appointments.
  • If you are an active military member, you may transfer between postings.
  • Collaborate with philanthropic organizations.
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2. Determine Your Method of Calculation

You have two options for accounting for the mileage deduction amount. The first is the usual mileage deduction, which requires you to keep note of how far you travel each year. If you don’t want to do that, you might claim deductions for vehicle expenditures incurred while carrying out eligible activities.

The normal mileage deduction just requires you to keep a track of qualified distance travelled. The deduction for the 2022 tax year is as follows:

  • 58.5 cents per mile for business, rising 2.5 cents from 2021.
  • Medical or relocating expenses for qualifying active-duty Armed Forces members: 18 cents per mile, an increase of two cents from 2021.
  • 14 cents per mile for nonprofit organization services, which will stay the same in 2021.

To claim the deduction for car expenditures, you must save all receipts and other appropriate paperwork pertaining to the costs of driving.

If you opt to claim the vehicle expenditure deduction, you may include depreciation, lease payments, registration fees, oil and petrol, maintenance, tires, tolls, parking, insurance, and any other costs directly linked to your car. Remember that you may only claim these expenditures if you are eligible.

3. Record Your Odometer at Start of Tax Year

If you want to claim the normal mileage deduction, you must record the total miles travelled in the tax year. Form 2106: Employee Business Expenses reports this sum. As a result, you must record the vehicle’s odometer at the start and end of the tax year.

But what happens if you buy a secondhand car? In this situation, keep track of the odometer reading from the time the vehicle is deployed until the conclusion of the tax year.

Between December 2017 and January 2026, you cannot claim the cost of your car as an employee as a “unreimbursed employee travel expenditure as a miscellaneous itemized deduction.”

4. Maintain a Driving Log (If Needed)

If you want to claim the usual mileage deduction, you must maintain a journal of the total miles travelled. The IRS is quite clear on this point:

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  • Record the odometer reading and mark the purpose, beginning location, finishing location, and date of each journey at the start of each trip.
  • The final odometer reading must be recorded at the end of the journey and subtracted from the starting reading to get the overall miles for the trip.

Because the IRS does not accept round values, your mileage record must be kept on a regular and consistent manner. So be specific.

5. Maintain Record of Receipts (If Needed)

You do not need to save or record your mileage if you pick the actual expenditure deduction. Keep copies of pertinent receipts and paperwork instead. Each document must contain the date, the cash amount paid for the service or product, and a description of the product or service required. Of course, the cost must be incurred within the tax year for which you are claiming.

6. Record Odometer at End of Tax Year

The ending odometer reading should be recorded at the conclusion of the tax year. This amount, together with the odometer reading at the start of the year, is used to compute the total miles travelled in the automobile for the year. Form 2106 requires information such as the proportion of miles travelled for business reasons.

7. Record Mileage on Tax Return

Fill out Form 2106, Line 12 of your tax returns with the total number of miles travelled. The dollar deductible amount is determined by multiplying this value by the regular mileage rate for the year.

If you use the real expenditures technique, you must categorize your receipts for expenses such as fuel, oil, repairs, insurance, car rentals, and depreciation.

8. Retain the Documentation

Documentation pertaining to a mileage deduction must be kept for at least three years. If the IRS asks to see your paperwork to validate the mileage deduction, create a copy and keep a personal copy. Make a fresh log for each tax year to keep track of everything.

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What Is the Federal Tax Deduction for Mileage?

The federal tax deduction for mileage is 58.5 cents per mile for commercial usage, 18 cents per mile for medical reasons, or 14 cents per mile for charity activities if you’re claiming relocation costs as an active military person relocating to a new station.

Is It Better to Claim Mileage or Gas for Taxes?

The decision to claim mileage or gas for tax purposes is totally up to you. If you pick the regular mileage option, you may claim 58.5 cents per mile in 2022. You must save all of your receipts if you wish to claim gas. Other vehicle-related expenditures, such as insurance, depreciation, lease payments, parking, tolls, and maintenance, may also be deducted. Keep in mind that you cannot claim both mileage and costs; you must select one.

What Is the Tax Deduction for Medical Mileage?

The tax deduction for medical mileage is now 18 cents per mile, up 2 cents from 2021. Active duty military troops who transfer to a new post pay the same rate.

What Is the Tax Deduction for Mileage When Volunteering?

The tax deduction for mileage for volunteers is 14 cents per mile, which is the same amount as in 2021.

The Bottom Line

It is completely up to you whether to claim mileage or car expenditures. If you drive often for work, you may profit by claiming mileage; otherwise, car costs are the best option. Whatever you do, be certain that you have clear and precise proof to back up your claims. Otherwise, Uncle Sam will come knocking on your door, demanding evidence.

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