|
|
| deducting auto mileage? |
| Posted by: Chris |
| Date: June 29, 2005 12:52:28 PM |
| I can never keep up with documenting auto mileages. I was told if I don't have records showing every trip and mileage, I cannot claim a deduction for auto mileage. What would your recommend for this situation? Thanks. |
|
| Reply To This Message | Quote This Message | Report This Message |
|
|
| Re: deducting auto mileage? |
| Posted by: Ed |
| Date: June 29, 2005 10:11:32 PM |
| I suggest you keep a written log in the glove box of your vehicle. Every time you plan on using the vehicle for business, take out the log, write down the mileage, drive to your business destination, business use reason, and then write down the mileage again to record the business use. At the end of the year, you can make a copy of the pages and include them in your income tax file fro the accountant to prepare your tax return.
As for the prior trips without a record, if you have receipts for purchases while on business in the car, perhaps you can reconstruct the mileage, but you will need to document it. |
|
| Reply To This Message | Quote This Message | Report This Message |
|
|
| Re: deducting auto mileage? |
| Posted by: REL |
| Date: July 02, 2005 11:44:49 AM |
| The IRS says that to take a business deduction for the use of your vehicle, you must determine whether the use was business or personal. If the answer is personal, no deduction is allowed. Most, maybe all landlords consider that deductible mileage includes travel between home and rental properties for whatever reason, trips to the home improvement center, and any other driving related to the business.
There is an often unknown and usually disregarded issue regarding what is allowed deductible mileage for self-employed individuals in general. This has to do with commuting mileage, that is, the mileage driven to the office in the morning and to home at the end of the business day. The IRS considers commuting to be personal use for a self-employed individual just as for a clerk at Wal-Mart. For a business where operated from an office not in the home, commuting mileage isn’t legally deductible, although many self-employed either don’t know this fact or choose to ignore it.
For a home office, commuting is usually considered to be travel from home to the first stop of the day and returning home from the last location of the day. For example, if a landlord leaves home and makes a stop at Lowe’s, visits several properties, goes to Ace Hardware, visits another property, and returns home, the first leg and the last leg are considered commuting and are not deductible mileage. I doubt that any significant percentage of small businesses take this into account.
As to whether or not a written detailed log with odometer readings is necessary I mention the fact that in one IRS publication, the IRS states that “to claim the deduction, keep adequate records, such as a written travel log with complete and accurate mileage records for each business use of your car. If you are unable to produce a clear and accurate business mileage record, the IRS may disallow the deduction.” Does the language “such as” mean that there are other options? I have used other options during my long business career, but I’ve never had to test them in an audit where my mileage deduction was an issue.
For additional insight into what interests the IRS regarding automobile use in business, see Part IV of Form 1040 Schedule C and Section B of Form 4562.
In order to be certain of the mileage deduction surviving an IRS audit, one who takes a deduction for business use of his vehicles will be on firmer ground if able to produce a mileage log. While some may be able to reconstruct a log if needed from receipts and day-planner records, a contemporaneous log is best. That is, writing down each trip including the date, time, destination, and, preferably, the starting and ending mileage, although simply the miles for each leg or a round trip is probably adequate. Logging in the day’s travels in the evening is doable if odometer mileage notes are kept throughout the day, but trying to recreate your travels at the end of each week (or longer) is next to impossible.
I know that very few self-employed individuals actually keep a contemporaneous log with odometer readings for each stop, as the IRS would like to see, and I’d bet that the percentage keeping any type of log is relatively low. Those I know don’t. Most simply roughly estimate their business mileage each year when doing their returns.
Most know that the only 1 to 2 percent of small business owners are audited and, even then, certain types of business are targeted whereas others are essentially ignored. For example, cash businesses are more likely to be audited than businesses where there is a bank record for every item of revenue. Furthermore, all audits won’t touch on the auto mileage issue anyway. Therefore, in practice the chance of being caught without a needed log is extremely low. For various reasons, all of the deduction taken is unlikely to be disallowed to begin with because there are ways to prove certain usage. For example, the mileage for driving to a landlord seminar in a distant city can be proven and various receipts would show that one made the trip, including those for buying gas along the way.
Most understand these facts and also know that the worst that will happen is that they will have to pay the taxes (plus some penalties) on a non-allowed portion of the deduction for one year in question. Most probably figure that they earned many, many times that amount for the hours that would have been spent on maintaining proper mileage logs during the 20 years that they were never audited.
|
|
| Reply To This Message | Quote This Message | Report This Message |
|
|
|
|
| Re: deducting auto mileage? |
| Posted by: Ralph |
| Date: November 10, 2005 01:15:26 AM |
| I don't know what might be available, but the format is not that critical and the IRS will not care about "pretty." It is easy to create something on the computer using eith Word or Excel. The IRS would like to see a log that shows date, starting and ending odometer readings, starting and ending locations, and purpose of trip. It might be good to also show times if you want to really make points. |
|
| Reply To This Message | Quote This Message | Report This Message |
|
|
|
|