October 19, 2019 - Business Mileage

Hi everyone! Public service announcement for those who deduct mileage for business given a recent situation with a friend. There are generally two methods for deducting the cost of your car - the actual expense and the mileage method. In the actual expense method you need to add the costs of car ownership (including depreciation) and multiply these costs by percentage of use for business. In the mileage method you multiply the number of miles used for business times the going IRS mileage rate (currently 58 cents per mile). In both methods you can add parking and tolls separately.

However, in BOTH methods the IRS expects to see a contemporaneous record showing the mileage traveled. This record should include the date, starting and ending location, business purpose (such as a client visited) and the miles traveled. This record is the only thing that will stand up to audit and it is difficult to recreate after the fact.

Therefore I beseech everyone to do yourself a favor, spend $60 and get MileIQ (or a program like it) which tracks your mileage in REAL time on your phone and allows you to classify them as business/personal. I use this program personally and I can rest easy knowing my car's business use is documented.

Feel free to reach out to me with questions.