Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Dec 22

    Auto expenses are an important deduction for business owners and employees who must travel. If you use your personal vehicle for travel, in-town or out-of-town, it is very important that you audit proof your auto deduction or risk losing the deduction in its entirety. The last thing you want to do is sit across the table from some burly, growling IRS auditor, with all the sympathy of a moon rock and the understanding of a doorstop, without any records to back up your deduction.

    Can you say bye-bye deduction and hello penalties?

    Auto expenses may be deducted using either the actual cost method or the mileage method. Documentation is the key and the required documentation is different with each method.

    Under the actual cost method, all expenses for purchasing, owning, and operating the vehicle must be documented. Receipts for fuel, oil, repairs, maintenance, insurance, etc. must be kept. In addition, if the business use of the vehicle isn’t 100% then you may also need to keep the mileage log information discussed next.

    You can audit proof your mileage method deduction by keeping a few simple records. A mileage log, diary, expense reports, trip sheets, cancelled checks, receipts, repair bills, and any other relevant information and documents are all that you need.

    What exactly does the IRS want to see?

    • How many total miles did you put on your automobile last year?
    • How many of the total miles on your automobile were for business and how many were personal? (This will show the business percentage.)
    • How many miles were driven for each trip, from business destination to destination? (IRS wants real numbers, not just a guess.)
    • What was the business reason for going to this destination? (Examples: Business meeting with Tom Smith of ABC Corp. or XYZ Store for office supplies.)
    • What other business expenses were involved in this travel? (Examples: Tolls, parking…etc.)

    Caution: There is a general rule which enables taxpayers to estimate business expenses when evidence indicates such expenses were incurred but an exact amount cannot be determined. However, such estimates cannot be used when claiming deductions related to automobiles. You must meet the substantiation requirements, or the deduction will be disallowed.

    If you use a day planner for your appointments, just write the mileage down on it. Or, if you use a wall calendar for your appointments, use that. Or, if you prefer spreadsheets, use that. Or use an app for that. The best method to use is the one that you will use. The IRS requires that you keep these records “contemporaneously”- meaning shortly after the event occurred. It is easier to keep up with it daily and is more acceptable in an audit.  Once you get in the habit it won’t seem so onerous.

  • Dec 8

    There is a success principle that applies to every one of us. No one is exempt and each of us should practice this fundamental way of thinking. No matter what your current level of success is; no matter how difficult your life is today. We should all apply this in our lives each and every day. The amazing thing is that it doesn’t cost us anything.

    What is this critical success strategy? It’s an attitude of gratitude. Each of us has countless reasons to be grateful. We all have hundreds of reasons to be thankful. We live in a great and beautiful country with infinite possibilities. We have families, friends, community, clients, and customers. We have tremendous opportunities to learn and grow. We can start a new business with nothing more than a great idea.

    We are all very fortunate, and we all have a cornucopia of reasons for feeling and expressing our Thanksgiving on a daily basis. I know it’s easy to become consumed with everything around us but an appreciation of what we have. It’s easy to pass through the daily grind and become swallowed up by “stuff.” The attitude with which we face these challenges is significant. A conscientious effort must be made to step back, take a deep breath, and look at our own personal reality in an appreciative manner.

    Developing and expressing an attitude of gratitude is one of the most important things that you can do to maintain a healthy balance in your life. One simple strategy to help maintain this balance is to develop a “gratitude list.” This is simply a list of the top 10, 20, or 30 things you are truly grateful for in your life. Some are easy to come up with – spouse, kids, health, friends, business, wealth, etc. Other things might take a little longer to think about to come up with. But you know that if you do not have them in your life, you would not be whole.

    Keep your gratitude list close at all times and when you’re faced with challenges in situations that seem hard to handle, pull out your gratitude list and count your blessings. It’s important to realize that each of us is really just here for an instant and we ought to be thankful for all that we have. Have a wonderful and happy Thanksgiving.