What to do if you weren’t tracking your mileage
Don’t panic—this is a pretty common situation. People who work for themselves don’t always 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 started your business in March, but haven't kept a mileage log for the first half of the year. Here's how you would go about filling in your mileage log:
1. Start with your trip logs, if you have them
If you drive for an on-demand platform, you likely have pretty good records of your business mileage.
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.
Your on-trip mileage serves as the minimum mileage that you can deduct. 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, including personal and commuting miles. You need to make sure your total mileage deduction makes sense when compared to your total miles driven. Ideally you’d note your odometer readings at the beginning and end of the year, but you could also use old maintenance receipts to figure your total mileage (since these often record odometer readings).
Once you find this number, you’ve got a range for what your actual deductible mileage is. You’ll know that your actual deductible mileage is somewhere between your total miles, and your rideshare miles.
3. Look for documentation of your other business mileage
Let’s assume that you are missing the miles from:
Between business meetings (or passengers, if you're a rideshare driver)
When driving from your home office to your first meeting of the day
From your last meeting back to your home office
This is where the sleuthing starts. You’ll have to find evidence that proves you actually incurred this non-trip mileage while running your business. Here are a few ways you can find that evidence:
Calculate the mileage for the drive to your first meeting
On a given day you can see where you began your first trip or 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.
For example, if you go online with your Uber app at home in Oakland, but drive to San Francisco before you get your first passenger, you can calculate how many miles you drove to the city and include those in your deduction.
Calculate the mileage between trips
You also have records on where one meeting ended, and where the next began. You can calculate the mileage that you incurred between those two locations. 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 like Uber trip logs or appointment books.
Want to double check your estimates?
Find recordings of your odometer readings throughout the year. This helps 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.
Find your driving patterns
The investigative work described above sounds like a hassle, right? Don’t worry, you can take the typical mileage you drive in a week or month and apply it to a larger period of time.
If you find your total deductible mileage for one month, and can prove that you drove about the same amount each month, then you can apply your typical 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 2017. 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.
One note: the goal of this exercise isn’t to re-create the mileage log that you should have kept in the first place. Unfortunately, it’s too late to have a complete mileage log of your business driving for the year, so don’t start making stuff up in order to have a complete log.
Rather, you’re looking to prove your average with as much evidence as you can. For rideshare drivers, you’ve got a lot of built-in evidence–after all, you didn’t receive paychecks from Uber for no reason. Just the fact that you received fare money from Uber proves that you did at least some driving. If you start with the evidence that you do have, you’ll be able to build a story around your rideshare activity.
4. Don't let it happen again!
Take the headache out of finding your mileage next year by starting your tracking now. Stride Tax helps you track both your mileage and your deductible expenses (for all of your independent jobs).