How to Record Mileage Expense in QuickBooks Online

Tracking your business mileage is one of the most effective ways to lower your taxable income, but messy logs can quickly turn this deduction into an audit risk. If you use QuickBooks Online, you have a powerful, built-in tool to automate and simplify the entire process. This guide will walk you through setting up, tracking, and recording your mileage expenses accurately so you can maximize your deduction with confidence.

Why Accurate Mileage Tracking is Non-Negotiable

Deducting vehicle expenses is a major tax-saving opportunity for small businesses, freelancers, and self-employed individuals. The IRS provides two primary methods for claiming this deduction: the Standard Mileage Rate and the Actual Expense Method. For many, the standard mileage method is simpler and yields a larger deduction. This method allows you to deduct a set amount for every business mile you drive. For 2024, the rate is 67 cents per mile.

Here’s what that looks like in practice:

• 1,000 business miles x $0.67/mile = $670 tax deduction
• 10,000 business miles x $0.67/mile = $6,700 tax deduction

However, the IRS has strict recordkeeping requirements. To claim this deduction, you must maintain a contemporaneous mileage log—meaning you record trips at or near the time they happen. Your log must include:

• The date of each trip
• Your starting and ending locations
• The total distance driven
• The purpose of the trip (e.g., "Client meeting with ABC Corp," "Visit to supplier," "Bank deposit")

Failing to keep these detailed records can lead to the IRS disallowing your entire vehicle expense deduction. This is why using a dedicated tool like the mileage tracker in QuickBooks Online (QBO) is so valuable; it ensures your records are organized, accurate, and audit-ready.

Getting Started: Activating the Mileage Tracker in QBO

Before you can track any trips, you need to make sure the feature is set up correctly in your QBO account. This involves adding your vehicle and configuring the tracking settings. You can do this from either your desktop or the mobile app.

To set up on your desktop:

1. Log in to your QuickBooks Online account.
2. From the left-hand navigation menu, select Mileage. If you don’t see it, it may be under the Apps or Cash Flow section.
3. The first time you open this section, a setup wizard will appear. Click Get started.
4. Click Add vehicle and enter your vehicle’s information, including the year, make, model, ownership status (owned or leased), and the date it was placed in service for your business.
5. Follow the prompts to connect the QuickBooks mobile app for automatic tracking if you wish. We’ll cover this in more detail below.

To set up on the QuickBooks Online mobile app:

1. Download and install the QBO mobile app from the App Store or Google Play Store.
2. Open the app and log in.
3. Tap the Menu (☰) icon and select Mileage.
4. Enable auto-tracking by toggling the switch to On. The app will ask for permission to use your phone's location services. You must grant this permission for the feature to work correctly—select “Allow While Using App” or a similar option.
5. Tap on My Vehicles and then the plus (+) sign to add your vehicle details, just as you would on the desktop.

Method 1: Automatic Mileage Tracking with the Mobile App

The most foolproof way to maintain an accurate mileage log is to let the QBO mobile app do it for you. Once enabled, the app uses your phone’s GPS to detect when you’re driving and automatically records each trip. You just need to classify the trips later.

How It Works

After you’ve enabled auto-tracking, the app runs quietly in the background. It senses a trip starting and stopping without you having to do anything. The trips then show up in the Mileage section of the app and your QBO desktop account, waiting for you to categorize them as either business or personal.

This is the greatest strength of automatic tracking: it captures everything. You’ll never forget to log a quick trip to the post office or a last-minute supply run again. All you need to do is periodically review your recorded trips and swipe them into the correct category.

Reviewing and Categorizing Your Trips

It's a good practice to set a weekly reminder to categorize your trips. This keeps the task manageable and ensures your records are always up-to-date.

1. Open the QBO mobile app and navigate to the Mileage section.
2. You'll see a list of uncategorized trips under the Unreviewed tab.
3. For each trip, simply swipe right to mark it as Business or swipe left to mark it as Personal.
4. When you swipe right for a business trip, the app will prompt you to add details. Type in the business purpose (e.g., “Site visit at 123 Main St.,” “Lunch with Pro client”) and tap Save.
5. The classified trips will then move to either the Business or Personal tab.

You can also perform this review from your desktop for a larger view. Just go to the Mileage section in QBO, where you'll see the same list of unreviewed trips to categorize.

Method 2: Manually Adding Trips

If you prefer not to use automatic GPS tracking or if you need to add a trip you took before setting up the app, you can add trips manually. This can be done on both the desktop and the mobile app.

Adding a Trip on the Desktop

1. Navigate to the Mileage section in QuickBooks Online.
2. Click the Add trip button in the top right corner.
3. A form will appear. Fill in the required fields:
   • Date: The date of the trip.
   • Distance: The total miles driven. If you know the start and end addresses, you can enter them, and QBO will use its mapping feature to calculate the mileage for you.
   • Trip Purpose: A short description of why the trip was for business.
   • Select Vehicle: Choose the correct vehicle from the dropdown menu.
4. Click Save. The trip is now added to your business mileage log.

Adding a Trip on the Mobile App

1. Open the QBO app and go to the Mileage section.
2. Tap the plus (+) sign at the bottom of the screen.
3. Select Create trip.
4. Fill in the fields just as you would on the desktop: start and end addresses, purpose, and date. The distance will be calculated for you.
5. Tap Save to add the trip to your log.

While manual entry works perfectly well, it puts the burden of remembering to log every drive on you. For this reason, most professionals benefit from the “set it and forget it” nature of automatic tracking.

From Logged Miles to Actual Expense: Recording in Your Books

Simply tracking miles in the Mileage section doesn't automatically create a financial transaction in your books. This is a critical step that many people miss. At the end of each month, quarter, or year, you need to use your logged mileage to create an expense entry. This is what officially records the deduction on your Profit & Loss statement.

Here’s the simplest way to do this using a journal entry:

1. First, calculate your total deduction. Go to the Mileage section in QBO and look at your total business miles for the period (e.g., for the month of June). Multiply this total by the current IRS standard mileage rate.
   Example: 500 business miles * $0.67/mile = $335.00
2. Click the + New button on the top left.
3. Under the "Other" column, select Journal Entry.
4. On the first line, select your vehicle expense account from the "Account" dropdown. If you don't have one, you can create it. Name it something like "Automobile Expense" or "Mileage Expense." Enter the calculated deduction amount ($335.00 in our example) in the Debits column.
5. On the second line, you need a credit. Because no cash was actually spent, this is a non-cash expense. Business owners often credit their Owner's Equity or Owner's Contribution account. This acknowledges that the owner personally incurred the cost of driving (fuel, wear and tear) for the business. Enter the same amount ($335.00) in the Credits column.
6. In the Description field, add a note for your records, such as "To record mileage expense for June 2024 (500 miles @ $0.67/mile)."
7. Click Save and close.

Your mileage expense is now properly recorded on your financial statements, reducing your net income and, ultimately, your tax liability. By creating these entries consistently, you ensure your books are always an accurate reflection of your business's performance.

Final Thoughts

Recording your mileage in QuickBooks Online transforms a tedious administrative task into a streamlined, automated workflow. By enabling the mobile app's tracker and consistently categorizing your trips, you create a detailed, contemporaneous log that will satisfy IRS requirements and maximize your valuable vehicle expense deduction.

Getting your client's or your company's bookkeeping in order is a great first step, but the tax implications go much deeper. Navigating the nuances of vehicle depreciation, Section 179, and the actual vs. standard expense methods requires accurate research. With Feather AI, you can ask complex tax questions in plain English—like "Can a business switch from the actual expense method to the standard mileage method?"—and get instant, citation-backed answers from authoritative IRS sources, enabling you to advise with confidence.