How do I track business use of my personal vehicle?
Every business trip needs four pieces of information: the date, where you went, the business purpose, and the miles driven. A trip to meet a client, pick up supplies, or visit a job site all count. Your daily commute from home to a regular office does not.
The easiest way to track is with a mileage app like MileIQ, Everlast, or Hurdlr. These apps run in the background on your phone and automatically detect trips. You swipe to classify each one as business or personal. At year end, you have a complete log without having to remember anything. Most cost $5 to $10 per month, which pays for itself if you drive for business regularly.
If you prefer paper, keep a small notebook in your vehicle. Write down each business trip immediately. Don’t wait until the end of the week or month to fill it in. The IRS expects contemporaneous records, meaning you tracked it when it happened rather than reconstructing from memory months later.
You have two options for claiming the deduction. The standard mileage rate is simpler. For 2024, the IRS rate is 67 cents per mile. Drive 8,000 business miles during the year and your deduction is $5,360. You don’t need to track gas, insurance, or repairs separately.
The actual expense method requires more record-keeping but can result in a larger deduction depending on your vehicle and driving patterns. Add up all vehicle costs for the year including gas, insurance, repairs, registration, and depreciation. Then multiply by your business use percentage. If 40% of your total miles were for business and your vehicle costs were $12,000, your deduction is $4,800.
Calculate your business use percentage by dividing business miles by total miles driven during the year. This means you need to track your odometer reading at the start and end of each year in addition to logging business trips.
Whichever method you choose, the underlying requirement is the same. You need accurate records of your business trips. The IRS has seen too many inflated mileage deductions to accept estimates or round numbers. If you claim 15,000 business miles, you should be able to show a log that adds up to 15,000 miles.
Keep your mileage records for at least three years after you file the return. If you are audited, having detailed trip logs with dates and business purposes makes the deduction defensible. A vague claim that you drove a lot for work does not hold up.
Building this habit takes some discipline, but it becomes automatic after a few weeks. A bookkeeper near Gentry can help you set up a system that works for your situation and make sure your vehicle expenses are recorded correctly as part of your monthly bookkeeping. The goal is a clean record that supports the deduction you are entitled to without creating extra work at tax time.
Northwest Arkansas's Dedicated Bookkeeping Partner
The Next Step:
A Quick Conversation
Tell us about your business and where you need help. We'll listen, ask a few questions, and give you a clear plan and honest price.
More Questions
How do I track maintenance costs for my fleet?
Track maintenance at the vehicle level using expense categories for different maintenance types and classes or projects in QuickBooks for each unit. Recording mileage at service time lets you calculate cost per mile and compare performance across your fleet.
Read answerWhat bookkeeping system works best for restaurants?
Restaurants need a system that handles high transaction volume, integrates with your POS, and tracks tips accurately. QuickBooks Online with proper POS integration is typically the best fit for most restaurant operations.
Read answerHow do I fix mistakes in QuickBooks?
Most QuickBooks mistakes can be fixed by editing, deleting, or voiding the transaction. The right approach depends on whether the transaction has been reconciled and how far back the error goes.
Read answerHow do I set up sales tax in QuickBooks for Arkansas?
Register with the Arkansas Department of Finance and Administration first, then enable automated sales tax in QuickBooks Online. Enter your business address so QuickBooks calculates the correct state and local rates for your location.
Read answerHow do I handle material costs that fluctuate between jobs?
Track actual material costs to each job as you purchase them rather than using averages or estimates. Record real prices in your accounting software and assign every purchase to the specific project where materials were used.
Read answerHow do I track labor costs for different job sites?
Track labor costs by job site using time tracking that assigns hours to specific projects, then code those hours in your accounting software so you can see true labor costs per job.
Read answer
