IRS mileage rate: What records do you need to keep
If you use your personal vehicle for business purposes, you may be able to deduct the resulting expenses on your taxes. The Internal Revenue Service (IRS) offers a standard mileage rate deduction, which allows you to deduct a set amount per mile driven for business purposes.
In order to claim the deduction, you'll need to keep records of your mileage. Here's what you need to know about keeping records for the IRS mileage rate deduction.
What counts as business mileage?
The IRS defines business mileage as any miles driven for the purpose of conducting business, regardless of whether the business is conducted for profit. This includes miles driven for:
Meeting with clients, customers, or business associates
Attending business conferences or conventions
Travelling to and from business appointments
Making bank deposits or other business-related errands
In general, if the primary purpose of the trip is business-related, the miles driven can be counted towards the deduction.
What records do you need to keep?
The IRS requires that you keep records of your business mileage in order to claim the deduction. You'll need to keep track of the following information for each business trip:
The date of the trip
The starting and ending odometer readings for the trip
The business purpose of the trip
If you use a GPS device or smartphone app to track your mileage, you can use that information in lieu of odometer readings. Just be sure to keep track of the date and business purpose of each trip.
You don't need to submit your records to the IRS, but you should keep them on hand in case you're audited. The IRS may also request that you provide additional documentation to support your deduction, such as receipts or a daily log.
How much can you deduct?
The standard mileage rate for 2022 is 62.5 cents per mile. This rate is subject to change each year, so be sure to check the IRS website for the most up-to-date information.
You can choose to deduct your actual vehicle expenses instead of using the standard mileage rate, but you'll need to keep track of all your expenses, including fuel, maintenance, and repairs.
You can also deduct parking fees and tolls incurred while conducting business, regardless of which method you use to calculate your deduction.
The IRS mileage rate deduction can be a valuable way to save money on your taxes, but it's important to keep accurate records in order to claim the deduction. By tracking the date, mileage, and purpose of each business trip, you can ensure that you have the documentation you need to support your deduction.