While the business use of your personal vehicle may entitle you to a tax deduction, the related expenses will need to be substantiated. This requires supporting documents such as invoices, payment receipts and a vehicle mileage log. Of these documents, the mileage log is the most crucial, because it provides the justification for attributing tax-deductible vehicle expenses to the applicable activity.

The Vehicle Mileage Log shown above, lets you track miles driven for each trip; then calculate the tax-deductible porion for the year. Whether you are claiming a deduction based on the Standard Mileage Rate or Actual Expenses, miles driven should be the basis for allocating certain vehicle expenses. As indicated by the checkboxes on the top of the page, this mileage log can be used to record miles driven for business, charitable, medical, and moving purposes. That said, mileage for each category should be recorded on a separate page.

Since tolls and parking expenses are only deductible if they are directly related to a trip with a tax-deductible purpose... they should be recorded on the mileage log, next to the related trip. However, repairs, maintenance, insurance, warranty and certain other expenses, must be allocated based on mileage. As a convenience, the Other Expenses page lets you record these line items throughout the year. If you claim a deduction based on actual expenses, you'll also need to keep track of your gasoline purchases.

The total number of miles recorded for the year, should be the difference between the odometer readings at the start of the year vs. the end of the year; as recorded on the Year End Summary page. It is a good idea, to maintain vehicle inspection reports that confirm these readings.

At year end, all vehicle expenses should be summarized by category, and recorded on the Year End Summary page. Mileage detail should be summarized and allocated to tax and non-tax categories, and reconciled to the mileage total based on odometer readings, from all vehicles. This is the proof that all mileage is accounted for; and would be necessary in an audit.

The important thing to understand is that... if you claim a tax deduction for vehicle expenses, a mileage log is necessary. Click the image above or the link below, to download our free Mileage Log.

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