Yes, if you use the standard mileage deduction you need to keep accurate records.
You have two optional methods to calculate your mileage expenses when using a personal vehicle for work purposes. If you don’t mind keeping receipts for every expense, you can calculate your deduction using actual expenses, including depreciation, licenses, gas, oil, tolls, lease payments, insurance, garage rent, parking fees, registration fees, repairs, and tires.
Your deduction is based on your business use percentage, i.e., your business miles as a percentage of your total miles.
The second method is to multiply the miles you drive for work by the Internal Revenue Service standard mileage rate, which changes every year (and sometimes twice a year).
Regardless of the circumstances of your employment, you will likely be asked to record the following:
- "the mileage for each business use"
- "the total mileage for the year"
- the time (date will do), place (your destination), and purpose
This is what the IRS considers adequate records (scroll to table 5.2 for an example) when it comes to logging business mileage.
It is also required that the record is timely. This means that it must be made at or near the time of the trip. Anything that is updated weekly is considered good enough.
If you're self-employed or a business owner, you need to adhere to the IRS's definition of adequate records. Keep in mind that the rules cover all transportation-related expenses.
Paper, diary, account book, digital spreadsheets, CSV files, PDF files, Xlsx (Microsoft's Excel) are all accepted by the IRS. In other words, the format does not matter as long as the right records are present (see "Adequate records" above).
The IRS actually provides a paper template, but it is from a time before electronic mileage logs. We do not recommend that you try to keep records by hand, mostly due to how tedious it can get.
