Four Reasons why you Need Precise Mileage Logs

January 25, 2021
Frederick W. Daily, J.D, LL. M (tax)
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Mileage logs keep proper records and can be used to document employees driving for business purposes. They are essential, especially for managers of remote workforces. Effective usage ensures mileage logs create a clear picture of both business and personal uses which are accurate and defensible in a situation where an audit is required. Without intending to, employers and their employees often classify mileages inaccurately, such as having the business and personal mileage in one category especially for commute miles.

A majority of people are unfamiliar with the details they must add to keep proper logs. Misunderstandings occur by reporting every mile driven (even trips for business purposes), and these lead to manual mileage logs which are incomplete and inaccurate. Most companies are therefore replacing paper logs with the automated mile tracker app for purposes of IRS compliance, time and cost saving and to reduce internal training and audits.

Mileage for Commute Purposes

For commute purposes, mileage can be calculated as the distance employees cover from their residences to work and back. Commuting costs are considered personal expenses by the IRS unless you have a homeoffice. These are not deductible and as such employees should not be repaid the costs incurred commutes. For mobile workers involved in field work and countless work-related commutes, the issue is not so cut and dry. For them, commute miles are only the miles driven from their residence to first job location and from the work location that comes last at the end of the day. With most being unaware of this fact, managers repay these mileages, yet they should lead to an increase in cost. Multiplying these reimbursements by the hundreds of workers can lead to millions of dollars being wasted especially with the addition of IRS penalties and taxes.

Mileage Logs that Comply with IRS

Business logs must be documented to provide reasons for mileage repayments. The IRS needs a variety of information such as dates, purposes, and destinations and not just the total mileage logs that companies deliver. The IRS has come up with a way of dealing with these inaccuracies by auditing the deductions that come with business expenses. Non-compliance with these guidelines means additional costs of deductions plus penalties for accuracy.

Tracking Solutions Used for Automated Mileage

Before the onset of the digital platforms, mobile workers had to write down mileage logs and ensure they are well maintained and reported with all the necessary details. Instead of manual logs, employers have the added advantage of using GPS enabled devices and apps for purposes of automated mileage tracking and differentiating the variety of commutes. With appropriate applications and software, manual tasks that are in the field are eliminated. Hence, it leads to an increase in productivity, costs reduction, and new insights gained for the commuting purposes of the mobile workforce.

The End Result

Despite the fact that mileage logs are effective for managing the mobile workforce, they come handy only when they are accurate and complete. The failure to document all information required by the IRS and the confusion of commute miles with those of business can cost a company thousands of dollars. With the advent of the new tracking apps for mileage purposes, the creation, maintenance and porting of logs is made easier and accurate. For purposes of being prepared for the chance of an audit being carried out, it is beneficial to ditch paper mileage logs and go for the electronic records provided by mile tracker app.

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Frederick W. Daily, J.D, LL. M (tax)
Originally Published
November 13, 2017