If I track my gas mileage expenses for tax purposes, is keeping gas receipts sufficient, or will IRS require a mileage log as well?
A mileage log is likely required if you use the standard mileage rate tax deduction method.There are two methods to calculate expenses for business use car tax deductions, you can only use one:the standard mileage rate methodand, the actual expense methodIt is up to the taxpayer to decide which one is best. Which method do you chose? Below is an overview of both methods.The Standard Mileage Rate MethodThe standard mileage rate is a method of deducting an IRS established per mile tax-deductible dollar amount for each mile driven for business purposes. Further, this method can only be used by the owner or lessor of the vehicle. For 2022. the standard mileage rate method is $0.58 per mile (for an updated list of each year’s standard mileage rate deductions please go, here). To use this method the taxpayer must keep a record or log of the miles traveled for business, the destination and business purpose (IRS Publication 463, Ch 5, Recordkeeping). In addition, the taxpayer must document proof of ownership of the vehicle or a lease. At the end of the year, this information will be added to the individuals• tax return using the IRS Form 2106. Also, you can include any business-related parking and tolls expenses with the standard mileage rate deductions.The standard mileage rate cannot be used if the taxpayer:Uses the car for hire (such as a taxi)Uses five or more cars at the same time (as in a fleet operation)Claims depreciation or a section 179 deduction (Publication 463, Chapter 4)If a rural mail carrier receives a qualified reimbursement (Publication 463, Chapter 4).The following should be included in a Standard Rate Mileage method mileage report:the miles you drove for business (ie your mileage)the places you drove for businessthe business purpose of your tripthe date of your tripThe Actual Car Expense MethodThe actual car expense method allows taxpayers to deduct the following vehicle and vehicle-related expenses:DepreciationLease paymentsRegistration feesLicensesGasInsuranceRepairsOilGarage rentTiresTollsParking feesIf business use of the car is less than 100%, expenses must be proportionally allocated between business and personal use. For example, say you drive your car 20,000 miles in one year–10,000 for business and 10,000 for personal. In this case, the taxpayer can only deduct 50% of the vehicle’s expenses from their tax return. Therefore, in the cases of mixed personal and business use of the car, it is recommended that the taxpayer keep a log of the miles traveled and distinguish the business from personal travel. This will facilitate ease in the determination and calculation of the percentage of vehicle usage for business purposes. In addition, the taxpayer should keep receipts and invoices of vehicle expenses. Taxpayers that use the Actual Car Expense method can use IRS form 2106-EZ, Unreimbursed Employee Business Expenses, to claim these expenses on their tax return. This form can be found, here.Whether you should use the standard mileage rate or the depends on your vehicle and the amount that you drive your vehicle for work. With strong record keeping calculating the deductions for both methods can help the taxpayer determine which method will maximize their tax return. Both methods require the taxpayer to keep a mileage log.Sources:IRS Publication 463, Chapter 4, Transportation, Standard Mileage RateIRS Publication 463, Ch 4, Transportation, Actual Car ExpensesIRS tax return form for Standard Mileage Rate deductions and other employee business expenses: Form 2106Car and Truck Expense Deduction RemindersThe IRS Standard Mileage Rate Deduction AmountsUnreimbursed Employee Business Expenses Form 2106-EZIf you decide to use the standard mileage rate method you will likely need a mileage expense log.What Should Your Mileage Expense Log IncludeThe IRS requires you to keep a detailed log of your miles if you want to deduct mileage expenses from your taxes, whether it’s a 1099 or a Schedule C, etc.With that said, the following should be included in your mileage report:the miles you drove for business (ie your mileage)the places you drove for businessthe business purpose of your tripthe date of your tripCheck out the links below to read more:Mileage Report, What's RequiredHow To Maximize Business Use Car Tax DeductionsThis answer does not consitiute professional tax advice. You should contact your own tax professional to discuss your situation.