Personal Use Tracking

When driving a company-provided vehicle, all of the miles that are driven can be classified in one of two ways: Business Miles or Personal Miles. What’s the difference between the two? Simply put, business miles are any miles driven between two business locations (except for commuting to/from your office). Personal miles are any miles driven outside of the course of doing business. For example, driving from your office to a client meeting would be considered business mileage. Conversely, driving home from that meeting, or driving to a doctor’s appointment during your lunch break would be considered personal mileage.

Why is it necessary to differentiate between the two types of mileages? Because, per the IRS, a company-provided vehicle is considered to be a fringe-benefit, and thus there is a small cost to the employee. That is the amount that the employee must pay to cover the personal use portion of their company-provided vehicle and will be reflected on their W-2 form.

Because the amount of money that an employee may owe is based upon the number of personal miles that are driven, it’s absolutely vital that accurate mileage logs are kept. Should an employee fail to keep records of their mileage, the IRS may deem that 100% of the miles driven were for personal use. There are various methods of tracking mileage, either electronically, or by hand, but whatever method is chosen should capture a few key pieces of data. Things such as the date, beginning location, ending location, starting odometer, ending odometer, total mileage, nature of the trip, and any ancillary costs (such as tolls) should all be noted.

Motorlease offers a simple, easy to use online portal for drivers to accurately log their personal and business milage to help keep your company compliant with IRS rules and regulations.