What records do you need to claim a vehicle mileage deduction?

February 25, 2015 by Dave Du Val, EA
speedometer

Hey Dave

I do not a get car allowance for my job in media sales. I do not log a report of my driving but typically I average 20k miles a year due to all the driving to multiple appointments daily for work. I claim 15k of those miles for work, as I do not do much or drive much on the weekends. Will this be okay?

Lisa

 

Lisa

Sorry to say but, if you are audited on this issue, the IRS is not likely to accept such rough estimates to substantiate the business miles. Vehicle expenses is an area that is frequently audited, and the substantiation requirements are quite specific.

If you are audited, the IRS will ask for a log verifying the business use of the car. That is the bad news. The good news is that they will allow a log to be re-created, as long as it is based on contemporaneous documents. Therefore, you should consider taking your appointment calendar and re-creating a mileage log from that. You can use online mapping software to determine the driving distance between points. The log should contain information on the date, the mileage, where you went, whom you met with, and the business purpose of the trips. This will be required whether you claim actual vehicle expenses or base your deduction on mileage driven.

Unless you have a home office, any mileage to the first business stop of the day and from your last business stop of the day to home, is generally considered to be non-deductible commuting mileage. Generally, any miles you cannot substantiate with contemporaneous records is considered personal miles, and therefore non-deductible.

Also required in an audit would be an employer letter stating that you were required to drive in your position and that they did not reimburse you for the expense. Two repair receipts or other documents with odometer readings - one near the first of the year and one from near the end of the year - would be needed as verification of the total miles driven.

In the future, it would be helpful if you noted the beginning and ending mileage each year. Some people even take photographs of their odometers with the date stamp turned on in their cameras. And, of course, actually maintaining a log book in your vehicle is most helpful, and it would save you the trouble of recreating documentation.

We hope you find this information helpful.

Deductibly yours,

Dave
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David E. Du Val, EA
Chief Compliance Officer for TRI Holdco

 

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


 

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