A well kept mileage log is essential for maximizing your deductions and preparing your return to withstand the scrutiny of the IRS. Don’t fool yourself and think that the Federal or State taxing authorities are never going to ask you for a mileage log. If they audit your return, and you do not have a mileage log, you will lose your deductions. If you think it will be easier to put a log together “IF NECESSARY” you are just kidding yourself. I have personally witnessed the horror from people faced with the need for a mileage log when they don’t have one. It is usually a long time removed from the filing when the need arises (read audit occurs). By then people have no idea when and where they drove to accumulate the miles that are on their return. I constantly remind folks to keep up with this information because it is a good practice to do so and it is REQUIRED by the IRS.
The following is what is required for a well kept mileage log. Date, beginning and ending odometer reading, purpose of trip noted. That is all you need. The same standards apply to business, medical, and charitable mileage deductions. Office supply stores have small mileage log books that you can purchase. They are set up for ease of entry into the correct heading. You can also use a pocket calender and jot down your odometer reading and the purpose of the mileage. I supply these for my clients on an annual basis and they are free for the taking. Either method will work well and they will substantiate your miles so that you don’t panic when the dreaded audit notice arrives. Travel on and log away.
[ Link to audit notice: https://www.tmicpa.com/avoid_audits ]
UPDATE 12-06-2010: I have recently learned that if a taxpayer has unusually high mileage that it may be necessary to have some third party verification of your logged miles. Oil change records will work well and if you use a third party oil change service that computerizes records then you can easily get a record from them. If you use someone that does not maintain those records or tend to use multiple locations then you should maintain a record of the oil changes and associated receipts.
It is also important to understand that if you are using more than one vehicle then you should maintain a mileage log for each vehicle. If you use the same log book to keep multiple vehicles you should clearly note which vehicle the mileage belongs.