Automobile Expenses - Mileage logs for taxes

[Ronald J Lowell]

The IRS provides taxpayers a choice between a flat rate per mile for transportation expenses and the actual cost of transportation based on the actual annual expenditures. If you choose the flat rate, maximizing those legitimate transportation deductions on your annual tax return are a simple matter of maintaining a complete and accurate mileage log.
Here are some rules to keeping a successful mileage log to prevent potential problems in the future.
Adequate Information

Your mileage log should include all of the information that the IRS may require of you to prove your claims. This includes the date of travel, name of person driving (if more than one user of the vehicle), destination and the odometer reading at the start and finish of the trip.

Consistent Recording

Be sure that you are filling out the information on the mileage log when the travel is happening. The longer you wait to fill information into the log, the more likely that information will not be completely accurate. It may be best to keep the log on the passenger's seat or in the front console as a reminder to record the information at the beginning and end of each drive.

Accurate Information

Check and double-check all information to be sure that it is correct. Do not guess about the information you're recording if at all possible. IRS laws require accurate information, not approximations. Also, filing false information on purpose is punishable by law and can be financially costly.

Retain Records

It is a good idea to keep your mileage log records for at least three years from the filing year, in case the IRS requires that you show proof of your claims.

[Stacey Shanahan ~ Community Mgr.]

Ronald, I received this same advice from a friend last year that is a CPA. I must admit, before she told me how I needed to record things, I was doing it all wrong. Thanks for sharing this great tax tip with folks on the network. ~S

[Jed Leviner]

Ronald, thanks for sharing this. I think I need to revisit my mileage log now.

[Ronald J Lowell]

For those of you who use actual expenses, you need to identify total mileage for the year versus business miles. The business percentage is what is used against the actual expenses to determine deductibility.

[Mary Jo Sheerin]

I have one other tip to add for all you business owners.

Keep a small daily planner or pocket calendar in your car. The moment you get in, write down in that days block: your destination, client name, the odometer reading on your odometer "right now", purpose of trip (you may be attending a seminar).

I am a CPA and this is what I do. I never forget to pickup the mileage and info because the minicalendar is in my car where I can't miss it.

[Ronald J Lowell]

Great comment, Mary Jo. I've been preparing taxes as an Accountant for 20+ years and have found that the easier the documentation is to read, the more readily it is accepted by the IRS. That assumes, of course, that it is within realistic parameters for that expense. Also remember that the mileage is measured to your next client. If you leave from home, you can claim the mileage to that client and then back to your office. If you leave from home and go to your office, the office mileage is considered commuting. If you are seeing multiple clients then it is safer to have one for each visit. You can take mileage for any business purpose, not just for client appointments.