Mileage Written Down in June Is Worth More Than Mileage Remembered in March

The assumption that a mileage deduction can be reconstructed in the spring from a calendar, a map and a reasonable memory is widespread, comfortable and wrong in a specific way. It is not that reconstruction is forbidden. It is that a record assembled after the fact is weaker evidence than one made at the time, that the reconstruction always produces a lower number than the reality because forgotten trips cannot be recovered, and that the exercise takes several unpleasant hours in the week when there are already several unpleasant hours to spend.

What a Log Actually Has to Contain

Four things per trip: the date, the business purpose, the destination, and the miles. That is the whole specification, and it can live on a phone app, in a notebook in the glove compartment, or in a spreadsheet updated weekly. Alongside the trips sit two numbers per year, the odometer reading at the start and at the end, which establish total miles driven and therefore the business percentage. Without those two figures the individual trips cannot be turned into a proportion, and the proportion is what several other calculations depend on.

The purpose field is the one people write badly and the one that carries the weight. Client meeting says nothing; meeting with the Harrison job about the change order says who, what and why in eight words. The distinction matters because the purpose is the only part of the entry that establishes the trip was business at all, and a log full of one-word entries is a log that has recorded the arithmetic and omitted the argument.

The Two Methods, and the Choice That Is Harder to Reverse

The standard mileage rate multiplies business miles by a per-mile figure set annually and covers fuel, maintenance, depreciation and insurance in a single number. The actual expense method totals what the vehicle genuinely cost across the year and deducts the business percentage of it, which means keeping receipts for everything and running the percentage calculation that the odometer readings support.

Which one wins depends on the vehicle. An older, efficient, cheap-to-run car driven many business miles usually does better on the standard rate. An expensive vehicle, a heavy truck, or one with high running costs and fewer miles usually does better on actual expenses. The trap is that the choice is not freely reversible: electing actual expenses with certain depreciation treatments in the first year the vehicle is used for business can foreclose the standard rate for that vehicle permanently, which makes the first year the year to think about rather than to default through. The relevant restrictions are set out in the IRS guidance on business use of a car, and they are worth reading once before the first return rather than after it.

The Trips That Do Not Count

Commuting is the big one and the deduction people most often claim by mistake. Travel between home and a regular place of business is personal, however early it is and however much equipment is in the vehicle. What changes the analysis is a qualifying home office as the principal place of business, after which trips from there to work locations become business travel rather than commuting, which is one of the more valuable consequences of answering the home office question properly.

Two other categories catch people. A trip that combines an errand with a business stop is deductible only for the business portion, which means the arithmetic depends on the route rather than on the intention. And travel to a temporary work location outside the usual area follows different rules from travel to a regular one, with the definition of temporary carrying a specific time limit rather than meaning whatever it sounds like it means.

The Local Detail That Catches People

Vehicle rules layer state and local questions on top of the federal ones. A vehicle used commercially may require a different registration class, a commercial insurance policy rather than a personal one, and sometimes a local license that names the vehicle. Personal auto policies commonly exclude business use beyond incidental driving, which means an accident on the way to a job could be uncovered on a policy the owner believed was in force. None of that affects the deduction and all of it affects the driver, which is why the mileage question is worth raising with an insurance agent at the same time it is raised with an accountant.

Reconstructing the Half of the Year Already Gone

June is a good moment for this because half the year is recoverable and half is still ahead. Work backward through a calendar, a phone's location history, invoices and job records, and reconstruct what can be reconstructed while noting plainly that it is a reconstruction. An approximation identified as an approximation is a great deal more credible than a precise-looking figure nobody can explain.

Then start the real log the same afternoon, because the second half of the year is the part that can still be done properly. A log begun in June covers half a year at full strength and turns the following January into a matter of adding two odometer readings rather than a reconstruction project. The habit costs about fifteen seconds per trip, which is the smallest input for the largest return anywhere in a small operator's paperwork, and it is the one that is completely unavailable in retrospect.