One of my clients is starting a home business serving as a companion to elderly women. She gave me a mileage log and asked me how she should use it. She also has a day planner in which she records appointments with her clients. I suggested that instead of trying to maintain two sets of records for business mileage, she use the day planner and include more information about each trip.
The IRS says that, to claim the standard mileage deduction, "appropriate records would include... a daily log showing miles traveled, destination and business purpose." The other big thing the IRS looks for is that the records are contemporaneous. That is, the information must be included at the same time as the business trip, not weeks or months later. I'm assuming that she will be using the standard mileage rate, not actual expenses, so she doesn't need to include costs for gas, tolls, parking, etc.
She was writing down the name of the person and the time of the appointment, but nothing else. I suggested she add (1) what she is doing, in general (sometimes she takes the person to an appointment, and other times she just spends time), (2) the place where the person is located (address or name of facility), and (3) mileage. Since she goes to the same places all the time, she could use notations, to show the location and the mileage. But the business purpose should be clear.
For example, her daily planner entry might look like this: 9/1/2011 - 2 -4 p.m. Betty Smith: Take to church (St. M) - K to St. M - K. 7.5 total. At the back of her daily planner she could have a list of abbreviations: (K=Kingston Senior Living Facility, 2010 Kingston St. Hillsdale, IA), (St. M = St. Matthews Church, 315 1st Ave., Hillsdale IA). She could also include odometer readings for the beginning and end of each trip, just to be sure.
My point is that instead of having both a daily planner and a mileage log, she can combine the two to make it easier to meet IRS requirements for business mileage records.
Disclaimer: I am not a CPA or tax attorney and the information in this article should not be relied upon for tax advice. The purpose of this article is to provide general information and an example. Every situation is different and tax advisors differ on what is acceptable for business records. Be sure to check with your tax advisor before you begin a business record keeping system.
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