What to do if you weren’t tracking your mileage
Don’t panic--this is a pretty common situation. Sometimes new drivers don’t get the heads up that their mileage is deductible, so they don’t keep a mileage log for their business.
Even though keeping mileage records throughout the entire year is absolutely the best way to document your mileage deduction, the good news is that drivers can deduct mileage based on incomplete records.
According to the IRS, this includes either a “written or oral statement containing specific information about the element,” or “supporting evidence that is sufficient to establish the element.” In plain English, this means that you need to make sure your estimate matches what evidence you do have.
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For example, let’s assume you’re an Uber driver who has no mileage log for an entire year of driving.
1) Start with your Uber trip logs
Uber (and Lyft, and many other on-demand companies) will track your on-trip mileage for you. This includes your mileage when you have a passenger in the car, but not your mileage when you are driving to the passenger, or driving between trips to find places where you’re likely to be matched with a passenger.
At the very minimum, you can deduct this mileage. It’s not a complete record of the business miles that you actually drove, but it’ll still save you money at tax time.
2) Find your total mileage
When you claim your mileage deduction on a Schedule C (or in a tax filing software), you’ll likely need to input how many miles you drove in total during the year. You need to make sure your total mileage deduction makes sense when compared to your total miles driven. You’ll know that your actual deductible mileage is somewhere between your total miles, and your Uber miles.
3) Look for documentation of your other business mileage
You know that you have a minimum amount of miles that you report on your taxes, and you know that you are missing the miles from a) between trips, b) when driving from home to where you picked up your first trip, and c) from your last trip back home.
On a given day you can see where you ended your last trip, and how far away it is from your home. It’s a tedious process, but if you calculate the mileage between those two points, and can document your exact starting and ending locations, you can calculate your deductible mileage from that information. Just be sure to include great notes on each drive that you add to your mileage log, and keep track of all of your supporting documents.
Want to double check your estimates? Finding recordings of your odometer readings throughout the year can help corroborate your story that your estimated mileage is consistent with your car’s total usage throughout the year. Maintenance receipts are great sources for odometer readings.
4) Find your driving patterns
If you consistently drive about the same number of miles in a month, and can prove that you drove about the same amount each month, then you can apply your average monthly mileage to the rest of the year.
For example, let’s say you were only tracking your Uber mileage for November and December of 2016. if you can show that your Uber income and trip number was the same for all 12 months of the year, and you know that you drove the same number of miles (or within a small range), then you could use your Uber income and trip logs as proof that your deductible mileage was consistent throughout the year.