Don’t Lose Your Mileage Deduction

September 15 is behind you. Extended partnership and S corporation returns are filed, and Q3 estimates are either paid or on your list. For Chicago-area trucking, livery, and small-business owners who drive for work, the next quiet trap is mileage. The IRS does not accept a year-end guess. If you cannot show business miles with a contemporaneous log, you can lose the deduction even when the miles were real.

Two ways to deduct vehicle costs

For a car, van, pickup, or panel truck used in your trade or business, you generally choose between the standard mileage rate and actual expenses. You do not get both methods on the same vehicle for the same year in the usual case. The choice matters for owner-operators, fleet managers who reimburse staff, and anyone who uses a personal vehicle for business errands or client runs across metro Chicago and the suburbs.

The IRS publishes the standard mileage rate each year (cents per business mile). It is meant to cover depreciation, lease payments, maintenance, repairs, gasoline, oil, insurance, and registration in one simplified figure. Actual expenses mean you track gas, oil, repairs, tires, insurance, registration, lease or depreciation, and similar costs, then multiply by the business-use percentage. Parking fees and tolls for business trips are usually deductible under either method when they are ordinary and necessary.

What "contemporaneous" actually means

IRS Publication 463 and the vehicle rules under IRC §274 expect a mileage log that is kept at or near the time of each business use. A spreadsheet you invent in March of the following year from memory is a weak defense. A phone app, a paper logbook in the cab, or a dispatch system that records date, destination, business purpose, and odometer readings is the practical standard.

At minimum, capture for each business trip:

• Date
• Starting and ending odometer (or total miles for the day if that is how you track)
• Destination or route (client, yard, scale house, airport, job site)
• Business purpose in plain words
• Miles that were personal or commuting, kept separate

Commuting between home and your regular place of business is generally personal, not deductible. Trips between the yard and a customer, between jobs, or to a temporary work location can be business miles when the facts support it. Illinois drivers should not label the home-to-yard drive as business mileage without a clear exception that fits their facts.

What survives an audit illustration

Example (illustration only, not your books): An owner-operator based near O’Hare drives a personal pickup for broker loads and shop runs. On the return, the Schedule C shows 28,000 business miles at the standard mileage rate. The only support is a year-end total written on a sticky note. In an exam, the agent asks for the log. There is none. Bank fuel charges prove the truck moved, but they do not prove business purpose or split personal miles. The deduction is reduced or disallowed, tax goes up, and accuracy-related penalties can stack under IRC §6662 when the understatement is large enough. The same driver with a phone log showing date, odometer, shipper, and purpose has a file that can be explained.

Records that help in practice:

• Mileage log or app export for the full year
• Beginning and ending odometer photos or repair invoices that show mileage
• Dispatch sheets, bills of lading, load confirmations, or calendar entries that match the log
• If you use actual expenses: receipts for fuel, repairs, insurance, and registration, plus a clear business-use percentage
• For reimbursements to employees or contractors: a written accountable-plan style policy and mileage reports that match what you paid

Fleet and livery notes for metro Chicago

If you run multiple units, keep one log per vehicle. Mixing vans without unit numbers double-counts miles. Livery operators need a clear off-duty vs on-duty split. Owner-operators who lease-on should know whether the carrier already reimburses mileage so you do not deduct miles someone else paid.

Form 4562 and the vehicle questions on Schedule C (or partnership/S corp equivalents) ask for business, commuting, and other miles. Those boxes should tie to your log. Rounding every vehicle to a neat 20,000 business miles with zero personal miles invites questions.

What to do before year-end

• Pick the method (standard mileage or actual) that fits each vehicle and your prior-year choices
• Backfill September and October from GPS, dispatch, or calendar while the trips are still fresh, then keep the log current through December 31
• Photograph each odometer on a fixed date (for example, September 30 and December 31) so totals can be checked
• Separate commuting from business miles in writing
• If you reimburse drivers, collect signed mileage reports before you cut the check

If you want help reviewing a mileage log, choosing between standard mileage and actual expenses, or tying vehicle costs to your 2026 return, call Ozfield Insurance & Tax Services at 773-536-9272, email tax@ozfield.com, or book a time at ozfield.com/make-an-appointment. Bring the log (or app export), last year’s depreciation or vehicle worksheet, and a list of units. We will tell you what still looks thin. Let’s get this filed.