Keeping a mileage log book for tax purposes can be a real pain in the neck, but it’s necessary if you want to save money and stay out of trouble with the IRS. So, it is essential to avoid common mistakes when maintaining a mileage log book for tax purposes. In this article, we’ll walk you through the top mistakes people make when keeping a mileage log book and demonstrate how MileageWise can assist you in avoiding these mistakes and maintaining an accurate and IRS-proof record of your business expenses.
Mistake #1: Not Recording All of Your Business-related Mileage
Let’s begin by discussing the mistake of not recording all business-related mileage. This can be a tricky one, especially if you are using a manual, paper log book. It’s easy to forget to log a trip or miss some mileage, but this can lead to inaccurate records and missed tax deductions.
That’s where MileageWise comes into play. With our automatic trip detection, there is no need to worry about manually tracking each trip. It’ll capture your personal and business-related travel for you so that you can concentrate on what you do best, running your business.
Mistake #2: Failing to Maintain Detailed Records
Next, let’s discuss the error of failing to maintain detailed records. This can be tedious, but it is essential for an accurate and IRS-proof mileage log. You must document the date, time, destination, and reason for each trip (business vs. personal).
It may seem laborious, but it’s the best approach to guaranteeing you have all the tax-related information you need. MileageWise’s trip details feature makes it easy to keep track of all the necessary information for each trip. You can add notes, record the purpose of the trip, and more, all in one place.
Mistake #3: Not Separating your Personal and Business mileage
Another common mistake is mixing business and personal mileage. It’s essential to separate business and personal mileage in the log book to avoid confusion and ensure you don’t miss any tax deductions. MileageWise’s business vs. personal trip classification can help you easily differentiate between your business and personal trips, so you don’t have to worry about mixing them up.
Do I have to track my personal miles for my mileage log?
Although the IRS doesn’t require you to keep a record of your personal mileage, however in the event of an audit, the IRS may request a mileage log to verify the business use of the vehicle. Without a personal mileage log, it can be challenging to prove that the miles driven were for business purposes, especially if there is a significant amount of personal use involved.
Mistake #4: Using the wrong IRS mileage rate
Applying the incorrect IRS mileage rate is another error to avoid. This can result in erroneous records and lost tax deductions. Each year, the IRS mileage rate fluctuates, therefore it is vital to use the correct rate for each trip. The IRS mileage rate for 2023 is 65.5 cents/mile.
Automatic IRS rate updates from MileageWise can ensure that you always use the correct mileage rate for each trip, so you don’t have to worry about keeping up with the changes.
Mistake #5: Failure to routinely update your mileage log
Finally, failing to update your mileage log book regularly can lead to inaccurate records and missed tax deductions. It’s essential to create a system for regularly updating your log book.
This is where MileageWise’s automatic trip tracking and real-time syncing are useful. You don’t have to worry about manually updating your logbook. MileageWise will do it for you, so you always have an up-to-date IRS-proof record of your business mileage.
In conclusion, maintaining a mileage log book for tax purposes need not be a hassle. By avoiding common mistakes and utilizing MileageWise, you can effortlessly maintain an accurate and audit-proof record of your business expenses without all the hassle. So then why wait? Try MileageWise and see the difference it can make for your business.
Angela Spearman is a journalist at EzineMark who enjoys writing about the latest trending technology and business news.