Final Answer:
A Mileage Log worksheet is a record-keeping document used to track the distance traveled by a vehicle for business purposes. It helps individuals or businesses claim tax deductions or reimbursements based on the mileage incurred while using a vehicle for work-related activities.
Step-by-step explanation:
A Mileage Log worksheet serves as a detailed ledger capturing the date, starting and ending locations, purpose of the trip, and total miles driven for each business-related journey. For tax purposes, it's crucial to maintain accurate records to substantiate any deductions or reimbursements claimed based on mileage. The IRS typically requires documentation that includes the mileage for business use to validate claims accurately.
To calculate the deduction or reimbursement amount, one needs to multiply the total business miles by the standard mileage rate set by the IRS for the tax year. For instance, if the standard mileage rate is $0.56 per mile and the business-related mileage logged in the worksheet for the year amounts to 5,000 miles, the deduction or reimbursement would be $0.56 x 5,000, resulting in $2,800.
The significance of the Mileage Log worksheet lies in its role as a substantiation tool. Accurate record-keeping provides a clear audit trail and ensures compliance with IRS regulations. Without proper documentation, it becomes challenging to justify mileage-related deductions or reimbursements, potentially leading to penalties or disallowances during tax audits. Therefore, maintaining a meticulous Mileage Log worksheet is critical for individuals or businesses seeking to claim legitimate mileage-related expenses.