The Importance of Tracking Your Mileage: How It Can Save You Money
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If you use your vehicle for business purposes, you could be leaving money on the table by not tracking your mileage. Whether you’re a freelancer, entrepreneur, or small business owner, keeping track of your business-related driving can result in significant tax savings.
Why Track Mileage?
The IRS allows business owners to deduct a portion of their vehicle-related expenses, including the mileage driven for business purposes. In 2023, the IRS standard mileage rate is 65.5 cents per mile. This deduction can add up quickly if you drive frequently for business, such as meeting clients or traveling for work-related events.
To qualify for the mileage deduction, your driving must be for business purposes. Common examples include:
- Traveling to client meetings
- Driving to job sites or locations
- Delivering products or services
- Attending business-related conferences or events
Commuting from home to your office doesn’t count as business mileage.
Tracking your mileage is easy with the right tools. Whether you prefer using a spreadsheet or a dedicated mileage tracking app, you should record the following details for each trip:
- Date of the trip
- Starting and ending odometer readings
- Purpose of the trip
- Total mileage
Having a dedicated tool like our Mileage Log Spreadsheet can make tracking simple and efficient.
What If I Don't Track My Mileage?
If you don’t track your mileage, you could miss out on valuable deductions come tax time. If you get audited, failing to show proof of your business mileage could result in disallowed deductions, leading to higher taxes.
When filing your taxes, you’ll report your mileage deductions on Schedule C for sole proprietors or Form 1120 for corporations. Keep your records and receipts for at least three years in case you’re audited.
Tracking your mileage isn’t just about saving money—it’s about staying compliant with tax regulations and reducing your overall tax burden. With a simple system in place, you can ensure that every mile counts when it’s time to file.