Deducting Mileage and Keeping a Mile Log for Your Business

If you own a business, then chances are you are constantly looking for anything and everything that can save you money. This rings especially true at tax time when the savings search goes the way of trying to find worthy deductions to go after.

One of the best tax deductions to use is the one that the IRS allows you to take for mileage that you put on your vehicle for work related travels. Currently, the IRS allows you to deduct 51 cents per mile driven for work related purposes and while that doesn't equate to much for one mile, when you add up several thousand miles over the full year, it ends up making a good amount for you to deduct.

However, all of this does come with certain rules that must be followed. There will be some mileage you can deduct and some you can't. For example, you can't deduct your normal commute to and from work, but you can deduct mileage you have to travel for work when the travels take you outside of your normal work zone. It gets complicated for sure and the best way to keep it all straight is with a mile log.

To create a mile log, you simply get a tablet or binder of paper and carry it with you in your vehicle where ever you go. If you think that the mileage you are going to travel will qualify as deductable miles, then track the miles, write them down, write the date down, and write the reason for the trip down. Continue to rack these types of stats up all year long.

When tax time rolls around, give the mile log to your accountant and let them sort through the log and tell you what is and isn't acceptable. They may even be able to tell you where you missed some miles that can be deducted.

Additionally, a mile log will help keep you out of trouble with Uncle Sam. Should you ever be audited and you have to prove all your deductions, then a mile log is the fastest way to state your case. So, a mile log can help you at tax time and even after tax time. It is a bit of work, but by keeping a strict mile log, you will be able to accurately deduct all the business miles that you are entitled to. It's your money, keep as much of it as you possibly can.

Source: IRS, IRS Announces 2001 Standard Mileage Rates, IRG.gov