Business Mileage: What Actually Substantiates a Deduction
Mileage is a commonly claimed and commonly disallowed deduction. What a contemporaneous log needs, commuting versus business miles, and standard vs actual.
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TLDR
Vehicle deductions are rarely lost because the driving was not business. They are lost because the log does not exist or was written afterwards. A record needs the date, destination, business purpose and miles, kept contemporaneously — at or near the time of the trip. Commuting between home and a regular workplace is never deductible, no matter how far. A qualifying home office changes the geometry, because trips from a principal place of business to other work locations are business miles rather than commuting. You generally choose standard mileage or actual expenses, and that first-year choice constrains later years, so it is worth deciding deliberately.
Almost nobody loses a mileage deduction because they were not really driving for business. They lose it because, eighteen months later, they cannot demonstrate it.
That is an unusually fixable problem. The rules themselves are not subtle.
#What a log actually has to contain
For each business trip, four elements:
- Date
- Destination, meaning where you went
- Business purpose, meaning who you saw or why you went
- Miles driven
Plus, for the year, your total miles and your beginning and ending odometer readings, because the deduction depends on the business proportion of total use rather than business miles in isolation.
#Commuting is not business mileage
The single most common error, and it is absolute: travel between your home and your regular place of work is personal, regardless of distance, regardless of whether you take calls on the way, regardless of whether you are self-employed.
Some things that are generally business miles:
- Travel between two work locations in the same day
- Travel to a client, customer or job site
- Travel to a temporary work location outside your metropolitan area
- Trips for business errands: the bank, supplies, the post office
The home office changes the shape of this, which is why the two topics belong together. If your home qualifies as your principal place of business, then trips from there to other work locations are business travel rather than commuting. That single fact converts a large amount of otherwise personal mileage, which is exactly why it is worth getting the home office question right.
#Standard mileage or actual expenses
Two methods, and you generally pick one per vehicle.
| Standard mileage rate | Actual expenses | |
|---|---|---|
| How it works | Business miles × the IRS rate for that year | Actual costs × business-use percentage |
| What it covers | Gas, maintenance, insurance, depreciation, all bundled | Gas, repairs, insurance, registration, depreciation or lease, tires |
| Record keeping | Mileage log | Mileage log AND every receipt |
| Usually better for | High miles, inexpensive vehicle | Expensive vehicle, lower miles, high running costs |
Note the row that surprises people: actual expenses still requires the mileage log. You need the business-use percentage to apply to the costs, and that percentage comes from the log. Choosing actual expenses does not free you from tracking miles; it adds receipts on top.
The first-year choice matters, because electing actual expenses in year one can foreclose using the standard rate on that vehicle later, and leasing has its own rules. Decide it deliberately rather than discovering it at filing time.
#If you have an S-corp
Different mechanics, and doing it the sole-proprietor way is a common error.
If the vehicle is yours personally and you use it for corporate business, the clean route is to reimburse yourself under an accountable plan. You submit the mileage, the corporation reimburses at the standard rate, the reimbursement is deductible to the corporation and not taxable income to you.
Without a proper accountable plan, reimbursements can end up treated as taxable compensation, which is a worse outcome than doing nothing. The setup is straightforward and needs to exist before the reimbursements, not after.
Putting the vehicle in the company’s name is a separate decision with personal-use implications, and it is not automatically better.
#Why this deduction draws attention
Vehicle expenses are claimed constantly, are easy to overstate, and are frequently unsupported. That combination makes them a natural thing to ask about, and a single request to substantiate mileage is a classic correspondence audit.
The good news is that it is also one of the easiest to defend if the log exists. There is no judgment call to argue about: either the record is there or it is not.
#What to do this week
- Install a mileage tracking app, or put a notebook in the car. Automatic is better because it survives your worst weeks.
- Record the odometer now, and again on December 31.
- Log the purpose, not just the destination. “Client meeting, Acme Corp” beats an address.
- Do it the same day. The whole value is in being contemporaneous.
- If you have an S-corp, confirm an accountable plan exists before reimbursing anything.
- Keep the log for as long as you keep the return, since it is the evidence behind the number.
#The short version
Four fields per trip, kept at the time: date, destination, business purpose, miles. Plus annual total and odometer readings. Commuting never counts, and a qualifying home office substantially changes what counts as commuting.
Pick standard or actual deliberately in year one, and remember that actual expenses still requires the log.
The deduction is legitimate and worth real money. It is also the one most often lost to a record that was never kept, which is a bad way to lose money you were entitled to.