What Do You Need To Know About Mileage Sheet?
When you are looking to claim mileage deductions from your total taxable income, it is important to follow the guidelines specified by IRS. Those using their personal vehicle for business purposes can avail a percentage of their driving-related expenses as deductions. Here, you should know that daily commutation from home to office is not qualified for deductions unless you have a home office. IRS has clearly laid down the regulations about the expenses that are allowable for these tax savings. However, you need a proper and timely maintained mileage sheet for claiming the deductions. For maintaining this sheet, you should follow certain important steps given here.
Prepare A Digital Log:
The mileage log or sheet should be maintained in a digital format to save it from any damage or loss. You need to maintain this sheet for up to five years after filing the taxes and claiming the deductions. A physical log book is prone to many threats but a digital sheet can be easily maintained and backed up for a longer time.
Know What To Include In The Sheet:
When it comes to mileage deductions, IRS has prescribed strict documentation procedures. Most importantly, it requires you to maintain an accurate log of all the business travels throughout the year. When maintaining a sheet, you should mention the relevant details related to these trips. It must include the starting mileage on your vehicle’s odometer recorded at the beginning of a financial year. Also, it should have the ending mileage and every business-related detail like start location, end location, gas expenses, tolls paid, purpose of the trip.
A mileage sheet should be maintained on per day or contemporaneous basis. You could prepare this log in a spreadsheet on your computer. This can be daunting when you are too busy managing other aspects of your work. Hence, you can rely on mileage tracker apps that record every mile covered for business trips.
The Procedure for Calculating Deductions:
There are two main methods for claiming mileage deductions on a personal vehicle used for business. Firstly, you can use the standard rate specified by IRS for every year. Using this method, you can calculate deductions for every mile covered through a simple formula. However, you cannot claim other vehicle-related expenses under this method.
For claiming deductions on actual expenses, you should maintain an accurate record of the expenses including registration charges, maintenance, gas bills, insurance, and repairs. Using this record, you can determine the total mileage covered for business travel as a percentage. This percentage shall be deducted from the total taxable income. Get all the details in our free e-books.
You have to be extra cautious when you deal with the IRS. If it fails to meet IRS requirements, a penalty will be levied on your income.