Mileage Tracking

How to Track Mileage for Work: An A to Z Guide

Natasa Djalovic
Last update on:
February 10, 2023 6:43 AM
Published on:

Mileage tracking goes a long way toward keeping your business expenses under control, maximizing tax deductions, and complying with IRS requirements. 

If you want to take advantage of mileage deductions, you need solid evidence to prove it. 

However, it's only fair to admit that tracking mileage for work is a major administrative headache, mainly because it's tedious and time-consuming. Plus, it has to be accurate, which means that guesstimating is out of the question. 

So, do you know how to track mileage for work efficiently and accurately? 

This article discusses the topic in detail and answers all your questions.  

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How to Track Mileage for Work: Recap

Before discussing the best way to track mileage for work, we'll go over the most important points. 

There are two methods you can use for this purpose: 

  • Using the Logbook 
  • Implementing a time-tracking app. 

It's easy to conclude that the time-tracking app method is much easier and more accurate, but we'll explain why that's so a bit later. 

Besides choosing one of these two methods, you also have to make up your mind about the options for deducting driving expenses for work. You can pick between:

  • The actual expense option
  • The IRS standard mileage deduction. 

When it comes to this decision, it's best to crunch the numbers and see which of these two options will give you a more significant tax break. 

What Is the Best Way to Track Mileage for Work?

Companies that heavily rely on a mobile workforce and use vehicles to travel between worksites need to know how to track mileage for work. 

Otherwise, they risk losing money on incorrect or inflated expense claims.

Statistics say that expense reimbursements are among the top three most common occupational fraud schemes in the United States and Canada.  

These cases result in a median loss of $120,000. 

Another reason why you should have the best way to track mileage for work figured out are tax returns. Tax deductions on expenses can be substantial, but the IRS can slap you with a hefty fine if your mileage claims aren't properly corroborated. 

The Logbook Method

This is an old-school system, as it involves keeping logging business miles either by using pen and paper or electronic spreadsheets

So, basically, your employees have to enter all the details manually after every trip. 

If you plan on claiming tax returns, you should be aware that the IRS can request an audit at any time. Therefore your expense documentation has to be compliant and regularly updated. 

To make it easier for your employees to enter data, create a template with columns for bits of information the IRS requires, which are:

  • Travel date 
  • Travel destination
  • Purpose of the trip 
  • Total trip mileage 
  • Trip expenses such as gas, tolls, etc.

This method can be particularly complex and inefficient when it comes to employees who have to visit several worksites within their shift, such as home care or construction workers. 

Moreover, this method doesn't allow you to check whether they take longer routes, pad mileage, or run personal errands during business trips. Given that they have to fill out the spreadsheet between their jobs, it's very likely for them to get distracted and forget to do so. 

That's why the next method is much better, more accurate, and time-saving. 

A Mileage Tracker App

The best way to track mileage for work is using a mileage tracker app like Timeero.   

There are several benefits to opting for this tactic instead of tracking mileage manually.  

Streamlining the process

With a mileage tracker at hand, you and your employees won't have to worry about missing a date or piece of information in the timesheet. 

This tool will capture all the trip details in an IRS-compliant manner and store them safely. In other words, you use these records internally to calculate employee expense reimbursement and externally in case of an audit. 

Ensuring tracking accuracy

Timeero provides a couple of extra added twists to your regular mileage tracker. It allows you to check your employees' location at any time, the speed at which they travel, and even replay the route they have taken. 

GPS technology makes it possible to track your employees' movements precisely and in real-time. The breadcrumb trail functionality lets you track every route your employees take retroactively. So, there will be no under-the-radar detours to increase your reimbursement costs. 

Timestamps add to the credibility, which is why the IRS will have no objections to your mileage records. 

In short, your employees won't have to make approximate or rough estimates or think about the mileage. Timeero even uses geofencing to notify your employees to start tracking mileage when they leave a predefined perimeter and alerts you if they don't do that.  

Improving employee accountability and productivity 

With no paperwork and administrative tasks, your employees will be free to focus on their job. 

Moreover, automation will have a positive impact on their accountability. At the same time, you'll be able to monitor every team member's performance. 

All these factors will result in boosting the productivity of all your employees. This includes the administrative department that won't have to waste time double-checking an avalanche of trip details and to try to identify potential incongruencies. 

Integrating with existing technology 

To additionally eliminate time-consuming, repetitive tasks, Timeero lets you automate reimbursement calculations. 

By integrating with payroll and invoicing platforms such as QuickBooks, Gusto ADP, Xero, or Paychex, you can eliminate paperwork, eliminate human error, and calculate payroll calculations in a snap. 

The integration with Zapier will make your life tremendously easier since it allows you to streamline your workflows by connecting your existing apps and transferring information between them seamlessly and effortlessly. 

To learn more about how to track mileage for work quickly and easily using an app, check out our Complete Mileage Tracker Guide

Are There Any Privacy Concerns When Using a GPS-Powered Mileage Tracker? 

Nobody likes being monitored and scrutinized. 

On top of it all, employees will worry whether using a GPS mileage tracker can invade their privacy, especially when they're off the clock. 

Timeero, for example, captures and stores locations only when an employee is clocked in. In addition to that, the system will notify them when their location is being tracked. A blue flashing icon will appear on iOS and a notification on Android so that the entire process is transparent. 

Once they clock out, the tracking stops. 

How to Deduct Mileage on Taxes?

Now that we're clear on the best way to track mileage at work, we can move on to discussing another important issue, and that's maximizing your mileage deduction.

To be able to lower your taxes and get some of the money you give to the IRS back, you should keep accurate and timely records of your and your employees' business driving. 

Note that only business miles are deductible, which can be a problem if the vehicle is used for personal and work purposes. The only way out of this is to keep separate records, and using a mileage tracker can make this significantly easier. 

However, we need to distinguish what qualifies as business driving so that you can be sure that the IRS will accept your claim.

What Miles Are Tax-Deductible?

The IRS allows tax returns only on the miles driven with the goal of growing your business. The Agency also doesn't consider commuting to and from work a business expense. 

So, if you choose to reimburse your employees for the miles they drive to get to work and travel back home, bear in mind that you won't be able to request a tax refund on those expenses. 

According to the IRS, deductible business miles can be some of the following: 

  • Going to meet a client 
  • Running business errands - a trip to the bank of an office supply store, for example
  • Traveling between different places of work
  • Driving to meet your accountant or lawyer. 

So, dropping to the nearby Starbucks to grab a cup of joe doesn't constitute a business expense. 

Business miles should be properly logged and distinguished from personal driving. 

It's worth mentioning that employees can no longer claim mileage deductions, but you can continue to reimburse them for business driving. 

Choose your method: Standard or Actual

To decide how to track mileage for work, you should also understand that there are two methods for claiming a tax write-off on your business mileage - the standard mileage rate or the actual expense method. 

It's essential to choose one of them before you start tracking mileage for work because the method decides what kind of calculation you will use, how your records will look like, and what evidence you need to collect. 

The standard mileage rate method 

The IRS establishes the so-called standard mileage rate or the amount you can deduct from every business mile driven every year. 

The standard mileage rate for 2023 is 65.5 cents per business-related mile. 

The reimbursement you offer to your employees can be higher, but you'll be able to claim only up to 65.5 cents per mile. 

This method is pretty straightforward - you multiply the number of business miles by 65.5 cents, and that's the amount of your tax-writeoff. 

If you opt for the standard mileage rate method, you need to substantiate your claims by providing the exact date, mileage, and business purpose, and that's why an app like Timeero is the best way to track mileage for work. 

To read more about the additional requirements and details for implementing this method, check out our Guide to Employee Mileage Reimbursement

The actual expense method 

The actual expense method refers to keeping records of all the expenses incurred while using a car for business purposes. 

In other words, these expenses include: 

  • Gas 
  • Oil
  • Insurance 
  • Tolls
  • Parking
  • Maintenance and repair costs
  • Registration fees
  • Depreciation
  • Lease if applicable 
  • Car loan interest. 

To prove all these expenses, you need receipts. 

If the car is used for both personal and business purposes, you need to calculate the percentage of business miles and multiply it by the expenses. 

So, if an employee drove a total of 20,000 miles, and 10,000 miles are business-related, then you can write off 50% of all car expenses. 

So, how to keep track of mileage for work if you're using the actual expense method? 

Contrary to common belief, you do need to stick to tracking mileage for work even if you're using the actual expense method. That's the only way to separate business and personal miles and provide the evidence to the IRS. 

Mileage tracking apps can help you calculate all this automatically and save you from crunching numbers and doing tons of paperwork.

How to Track Mileage for Work, Plus Save Time and Money?

Staying on top of all your business mileage logs is a lot of work, but it's necessary if you want to cut your expenses and hold your employees accountable. No matter which one of the methods for calculating business miles you choose, you should implement a GPS mileage tracker to ensure the accuracy and efficiency of the process. 

Streamline Mileage Reimbursement.

Timeero keeps accurate track of employees’ miles.
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Natasa Djalovic

Natasa is a writer specializing in the IT and software industry with 6+ years of experience in content writing and online marketing. During that period, she wrote more than 1,000 articles and several ebooks. She majored in English language and literature and loves cats, sneakers, and candy. When she's not working, she's probably binge-watching Netflix.

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