Income tax laws don't require maintaining a mileage log for business use of your vehicle. But lack of a mileage log does affect the tax consequences of vehicle reimbursements you receive. Mileage records are necessary to classify reimbursement plan payments as non-taxable income. This Internal Revenue Service rule applies to plans paying you a vehicle allowance as well as an amount per mile.
Employees are required to provide adequate documentation to receive employer reimbursements for business use of a vehicle. You need to supply a record of the date, place, and business nature of each vehicle usage along with the number of miles. Every record documents an uninterrupted round trip. A single trip may consist of more than one business purpose and can combine with minimal personal use. These are the standards for an "accountable plan," according to the IRS.
You must provide your mileage record to your employer within 60 days of driving the business miles or within 30 days if you received an advance from your employer. Accountable plans have additional requirements pertaining to advances from your employer for business use of your vehicle. You must return advances that are not subsequently proved by mileage records. You're also required to return advances that exceed the standard mileage rate established by the IRS.
Employer reimbursements for business use of your vehicle that follow the IRS accountability rules don't count as your taxable income. Therefore, payments do not appear on your annual W-2 if you provide a timely mileage log and aren't reimbursed more than the standard mileage amount. If the accountability standards are not followed, an employer reports payment you received for business use of your vehicle as compensation on your W-2. You then owe tax on your reimbursements.
If you're reimbursed less than the IRS standard mileage rate, you're entitled to a tax deduction for the portion of your mileage expense that's not reimbursed. In addition, you may deduct your mileage expense if your reimbursements are added to compensation reported on your W-2. Therefore, you need mileage records to determine your tax deduction even when you don't have this information to provide your employer for reimbursement under an accountable plan. You have to itemize deductions to deduct unreimbursed employee vehicle use under 2206 which reports under Schedule A.