The tax code allows deductions for qualified miles driven for
business, medical, moving and charitable purposes. But to claim this
deduction you must keep adequate records of actual miles driven. During an
audit, this is an often disallowed deduction, despite the fact that you
actually drove the distance claimed. How can you make sure this doesn’t
happen to you? Here are some tips.
1. Keep a log. The tax code is clear
on this point. You may not estimate your miles driven. You must support
your claimed deduction, ideally with a detailed mileage log.
2. Create good habits. Your odometer reading
and miles driven should be noted as soon as possible after the event. Keep
a log book in your car and note the miles driven each day. Logs created
after-the-fact with estimated miles driven could be disallowed during an
audit.
3. Make thorough entries. Note the odometer
readings, date, miles driven, the to/from locations, and the qualified
purpose for the trip.
4. Don’t lose out on the extras. The deduction for
miles driven is meant to provide a deduction for fuel, depreciation, and
repairs. You can also deduct out-of-pocket expenses for tolls, parking and
other transportation fees. Keep a running total of these fees in the back
of your mileage log.
5. Keep separate logs for each deduction. Remember you may
deduct mileage for business, charitable purposes, qualified moving and
medical miles. It is best to keep track of each in a separate mileage log.
6. Alternative business transportation
deduction. When it comes to deducting business transportation expenses,
remember the miles driven method is not the only one available to you. You
may also deduct your actual expenses, but how and when you make this
determination is important. In the initial year of placing your vehicle
into service for your business, it is best to keep track and record all
your actual auto expenses. An analysis can then be conducted to see which
method is best for you to maximize your deduction.
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