Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Dec 16

    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 tax auditor without any records to back up your deduction.

    Can you say bye-bye deduction and hello penalties?

    You can audit proof your deduction by keeping a few simple records. A mileage log, diary, 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.)

    If you use a day planner for your appointments, just write the mileage down on it.  If a wall calendar is used for your appointments, that will work too, just make sure to add up the mileage.  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.