When it comes to tracking, calculating and reporting mileage associated with doing work for your employer or as a self-employed individual, there could be different requirements to be aware of. An employer may also have specific requirements regarding mileage reporting. In addition, the IRS has rules that apply to business owners and those who are self-employed. There may be instances where, as an employee, you may want to maintain your own records.
What are adequate records as defined by the IRS?
Regardless of the situation regarding your employment status, you could be asked to record the following:
- the mileage accumulated for each business use
- the total mileage accumulated for the year
- the time, place (destination) and purpose of the trip
When it comes to logging business mileage, these are the typical areas the IRS deems as important and warrants good record keeping.
The activity should also be recorded in a timely manner. In short, the records should be made at or near the time of the trip. Updating these records on a weekly basis is considered to sufficient.
Self-employed and business owners should adhere to the IRS definition of adequate records. This should cover all expenses related to all transportation.
Formats the IRS accepts
The IRS accepts records in a variety of formats, including paper, diary, account book, digital spreadsheets, CSV files, PDF files, Microsoft’s Excel. Etc. The specific format is of less importance compared to the need to keep correct and accurate records.
The IRS actually provides a paper template, but it is from a time before electronic mileage logs.
If needed, your employer will likely tell you which records they need and in which format. Often, employers will utilize the latest technology to keep track of and calculate employee mileage. Solutions such as TripLog allow the employer to manage employees, rules and reporting for multiple employees while allowing employees to easily track mileage using a smart phone app.
Is taking an odometer reading every trip and IRS requirement?
The IRS does not require you to record your odometer at the beginning and end of every trip. The real requirement for the IRS is that odometer readings is that they are provided each year, especially if using a new vehicle
It is possible that your employer might ask employees to record odometer readings more frequently.
What are the requirements for mileage tracking?
Currently, there are no requirements regarding how to track your mileage. The important thing is that you record the mileage of each trip, meaning:
- recording the odometer at the beginning and end of the trip, or
- tracking/recording your trips differently, for instance using your phone or a GPS.
The easiest way to track mileage is to use a mileage app, such as the smart phone app from TripLog. Whether using an iOS or an Android device, TripLog offers tools that can be easily used by employers, employees and those who are self-employed.
Are logging personal trips required?
If the vehicle is used for both personal and business purposes, it is important to segregate the portion of mileage being used exclusively for business. An example of segmenting out the personal and business mileage can be found here. This will usually mean being diligent and keeping good records of when the car is being used for personal and business use.
How long should records be kept?
While it depends on the situation, it is often better to keep records, especially when related to business purposes, for a few years. As indicated by the IRS:
Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed.
It’s also worth noting that the IRS considers a return filed early is a return filed on the due date. In addition, different rules likely apply if your employer is a relative.
Should I keep copies of records as an employee?
It is generally a good idea to keep copies of records as an employee, as those records could be requested some time later. The reasons for the request may result from something that is no fault of yours. With that in mind, having them just in case is a good idea.
Using a smart phone app from TripLog makes it much easier to track and ensure you have adequate records if those records are needed at a later date. digital mileage log and tracker makes it more likely that you will have adequate records available if needed.
What happens if I get audited?
If the IRS audits you and asks for mileage records, they can be kept in any format mentioned in one of the earlier paragraphs of this article. Additionally, tracking mileage via the TripLog app makes record retrieval faster and easier.