Because you do not own the vehicle, you cannot use the standard mileage rate, and yes, you must keep track of them. The standard mileage rate includes an allowance for depreciation, which you can only take if you are the owner. You must use the actual expense method.
It is important to keep complete records to substantiate items reported on a tax return. In the case of car and truck expenses, the types of records required depend on whether the taxpayer claims the standard mileage rate or actual expenses. For actual expenses, a mileage log helps establish business use percentage. Taxpayers should also retain receipts, invoices and other documentation to show cost and establish the identity of the vehicle for which the expense was incurred.
- Actual expense method (eligible expenses include depreciation, lease payments, registration fees, licenses, gas, insurance, repairs, oil, and tires)
Note: Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expenses.
It’s important to track your mileage. If you’re audited, you may need to show a log of the miles you drove. Where do I enter actual vehicle expenses?
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