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Jean   Murray

Keeping Track of Business Mileage - I Learned a Lesson

By January 19, 2010

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This is another one of those "do as I say, not as I do" things.  I went to talk to my CPA about reducing my taxes because I made a profit in my business in 2009.  One of his first questions was, "What kind of mileage do you have for your business?"  OOPS!  I never kept track of mileage last year; most of my sales were via Internet, and my consulting was local.  But I realized I was missing a BIG deduction, because I forgot my own advice about keeping track of all the little things.

Capture All Information

You can't deduct what you can't prove, so you must capture the business information to take the deduction.  The best way to do this is to keep a small log book in your car and write down 3 pieces of information about every business trip:

  1. Date of travel
  2. Purpose (client name, or other business purpose like banking, meeting with CPA), and
  3. From/to.  Write down where you left from (home, etc.) and the address or some information about the place where you are going.  You can record the actual mileage if you want, or you can add this in later from a map program on the Internet.  The important thing is to record where you started and ended the trip.

If you think you may be using actual expenses, rather than the standard IRS mileage deduction, include information on any expenses, like gas/oil, and the amount.

If you use the same car for business and personal use, you must also record the mileage at the beginning and end of the year, so you can calculate a business use percentage.

IRS Requirements for Mileage

The IRS wants "timely and accurate" records.  They expect you to keep a "daily log showing miles traveled, destination and business purpose." My CPA suggested I look back through my 2009 business calendar to see if I recorded any trips, but it might be difficult for the IRS to accept any records I produce, since they weren't created at the time of the travel.

Bottom Line: Start now to keep track of your expenses for business use of your car, even if you don't think there will be many business trips.  Getting into the habit in January is better than losing out next April.  Take it from me, I'm going to get a notebook and start recording everything right now.

For More Information

Calculating Business Mileage for Tax Purposes

Business Auto Expense Deductions FAQ

2010 IRS Standard Mileage

Comments
January 26, 2010 at 9:00 pm
(1) Ms. Law says:

In business, things, however small, must be kept in mind and on record.

February 24, 2010 at 4:13 pm
(2) Paul King says:

My brother and I had the same problem and have since developed a piece of software to help us called 1DayLater. It might be useful to you as well. As you say it’s easy to lose track of mileage, and when it’s an expense you can claim back you’d be silly not to. The hardest bit is developing the habit and then keeping it! Paul a href=”http://1daylater.com” title=”1DayLater”

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