For freelancers and small business owners, the often-overlooked mileage logbook is a valuable tool for maximizing tax deductions. While it might seem like a tedious chore, consistently updating a record of your work-related trips can greatly lower your tax burden.
Why You Shouldn't Ignore Your Mileage Logbook
Boost Your Tax Savings: The IRS allows you to deduct a portion of your driving expenses, including petrol, repairs, and wear and tear, based on the business miles logged.
Audit Defense: In the event of an audit, a well-kept mileage logbook provides undeniable proof of your work-related trips, shielding you against potential penalties.
Monitor Your Costs: Beyond tax benefits, a mileage logbook helps you track your auto-related expenditures, find ways to save money, and improve financial planning.
What Makes a Good Mileage Log?:
Date and Time: Mileage Log Log the date and time of each trip, including the starting and ending times.
Log Your Odometer: Carefully track the odometer readings at the start and finish of each trip.
Trip Location: Indicate the location traveled to.
Reason for Travel: Briefly describe the purpose of each trip (e.g., worksite visit, job site visit, professional seminar).
Business Use: Mark the business purpose of each trip.
Best Practices for Mileage Tracking:
Stay Consistent: Develop the discipline of recording your mileage right after each trip.
Use Digital Tools: Consider using mileage tracking applications or tracking gadgets to simplify tracking.
Keep it Updated: Periodically review your logbook for errors and omissions.
Protect Your Records: Maintain an orderly record and in a protected area.
Beyond the Basics:
While the Mileage Log offers rules on mileage logs, you can maximize their value by:
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