"Did You Know?" #3

DID YOU KNOW the IRS will want you to produce detailed mileage records in an audit if you claimed a standard mileage deduction for business miles?

For 2023 the IRS mileage rate for business is 65.5 cents per mile. This is recorded in the Schedule C. This is an enticing deduction for self-employed individuals who want to reduce their taxable income. However, if you want to survive an audit, there are some rules you need to follow.

Only business miles are deductible. If you use a car for both personal and business miles, the following is especially important. If you are using the standard mileage deduction, the best recordkeeping you can do is to use a mileage logbook or app…for every business-related trip. Pick the method you are most likely to use regularly and stick to it.

Record your January 1st and December 31st odometer readings. If you want to “go the extra mile” (yes, pun intended), get an oil change at the beginning of each year so you have documented proof of the odometer reading. Also, keep copies of all the maintenance records for your vehicle.

You will want to record the following every trip:

  • Date of the trip

  • Starting location and starting odometer reading

  • Destination location and ending odometer reading

  • Business purpose

  • Tolls or other related trip costs

“Commuting miles” are not deductible. This means driving from your home to your first “job” of the day and driving home from the last “job” of the day are not deductible. Miles in between jobs are deductible…unless you’re are using those miles for personal matters. Keep a copy these records with the tax return for that year.

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