It is very important to keep a good record of your mileage for tax purposes. You should always record the beginning and ending mileage each year. This is important whether you use mileage or depreciate your vehicle.
When you use mileage, you should keep some kind of log. And it is important that you be consistent. According to the law, you are required to record the following:
- where you went
- how many miles from your office to your client or vendor
- the purpose of your trip
- and the date
Unless your vehicle is industry specific, for instance, a truck or van filled with equipment and does not carry passengers; you will always have some mileage that is personal. This is also true of a vehicle that is being depreciated; so it should not be considered 100% business.
By keeping an accurate mileage log you will be able to take full advantage of your mileage deductions. And should you be audited, your log will help ensure that you do not lose precious tax reductions.
Sandra Vincent, The Bookkeeping Company