How to Track and Report Business Mileage Expenses in IRS Form 1040
Business mileage expense record keeping for IRS tax deduction: what you need, how to easily record your mileage, and what to report to the IRS.
When you drive your personal vehicle for work-related purposes, you can claim the vehicle expenses pertaining to your business travel (excluding commute) as tax-deductible, and report these expenses in your annual IRS tax return.
The IRS lists several methods for reporting your vehicle expenses. These include the Standard Mileage Rate method, the Actual Expenses method (a.k.a FAVR, or Fixed And Variable Rate), and Car Allowance.
This article focuses on the most common method for logging and deducting vehicle expenses: the Standard Mileage Rate. It's easier than you think, and, with the help of a good mileage tracking app, takes very little time to maintain.
What you'll need
- A personal vehicle registered on your name. The business use of your personal car, van, pickup or panel truck is tax-deductible.
You cannot claim business mileage expenses for a company car. If you drive a company car, you should log your personal use of the car, rather than the business use. More info: The IRS Tax Rules on Personal Use of Company Car.
- A mileage tracking app. A mobile app that reliably tracks all your trips and keeps a closed mileage logbook of your vehicle.
You'll want to use an app that tracks trips automatically, so that you do not have to start and stop the app manually, or forget to log any trip. Make sure the app is compliant with IRS guidelines with regards to "record keeping", i.e. that the data recorded include departure and arrival times, full address info, vehicle details, and notes explaining the purpose of each trip. Additionally, the app must allow exporting of data as a mileage report, to be attached as evidence to your tax return forms, in case required.
Psngr app is tailor-made for tracking mileage accurately and automatically, for tax-deduction or reimbursement. The app tracks and classifies trips automatically, minimizing the time required from you. Our app is trusted by over 100,000 drivers worldwide, and logs over 7 million miles per day. Psngr app works in conjunction with Psngr Beacon, a Bluetooth USB key which you plug in your vehicle and is detected by the app as soon as you start the engine. This ensures that your vehicle logbook is complete and that all trips made with the vehicle are recorded, regardless of the driver.
- IRS Form 1040 - Schedule C. You'll need to report your business mileage expenses under "car and truck expenses", along with details of your vehicle and the mileage logged. More info in the last section of this article.
How to record business mileage
Use a mileage tracking app to record all your trips. In your app, you'll need to separate your mileage into 3 categories:
- Business miles. This includes any driving you did while performing services for clients or customers, traveling to and from business meetings, driving to purchase business supplies, or any other driving related to your self-employment. If you use your vehicle to perform tasks related to charity, medical or moving purposes, you can report those miles as "business miles" in IRS form 1040, but you must use the appropriate rate per mile when calculating these expenses. The IRS standard rate for charity and medical/moving differs from the business rate.
- Commuting miles. This includes the miles you drove your vehicle while traveling between your home and your regular place of business. Commuting miles are not considered deductible for tax purposes, as they are considered personal travel expenses.
- Personal / other miles. This includes all non-business and non-commuting miles.
The simplest method for calculating the business mileage expenses to include in your IRS tax return is Standard Mileage Rate method. The standard mileage rate may be used to figure the deductible costs of a vehicle that is owned or leased. If you use the standard mileage rate for a leased vehicle, it must be used for the entire lease period.
The standard mileage rate is adjusted annually by the IRS to reflect changes in the cost of operating a vehicle. In some situations it is adjusted during the year. The standard business mileage rate in 2023 is 65.5 cents per mile.
The standard mileage rate is used in place of actual expenses. In other words, you may not deduct your actual vehicle expenses, such as depreciation, lease payments, maintenance and repairs, gasoline, oil, insurance or vehicle registration fees. Business-related parking fees and tolls may be deducted in addition to the standard mileage rate. However, parking fees at your main place of work or tolls related to commuting are personal expenses which are not deductible.
How to report business mileage to the IRS
Gather the information from your mileage tracking app, as available in the annual report or overview:
- Total miles logged with the vehicle during the year.
- Total business, commute and personal miles.
- The date at which you placed the vehicle in service of the business
Fill in the information above in IRS Form 1040 Schedule C:
- On line 9 "Car and truck expenses", fill in the total expense amount of your business mileage (your mileage tracking app should provide this figure based on the standard mileage rate).
- Under "Part IV: Information on your vehicle", fill in the rest of the required info, based on the figures available from the report generated from your mileage tracking app.
The IRS provides detailed instructions on how to fill in form 1040. Read the instructions carefully to avoid mistakes and, when in doubt, consult with your accountant.
It's important to note that the IRS has strict rules for determining what constitutes business use of a vehicle, and you must be able to demonstrate that the expenses were directly related to your employment. The IRS may also request documentation to support your claims, so it's essential to keep accurate and detailed records of all your expenses. Psngr app provides such records in the form of a mileage expense report. Download and try out the app for free today.