Business Vehicle Mileage & Expenses

The Bottom Line Is Accountability

Our advice to our clients is, if you want the deduction allowed in an IRS audit, keep the auto log books that we provide on an annual basis. Our experience with the IRS has indicated that IRS auditors are generally satisfied if a written record is produced; without the record, the deduction is usually disallowed. The rules for record keeping have not been relaxed. Auto logs, diaries, or other similar written records are still required to prove the business use of automobiles or the deductibility of travel, meals, and/or entertainment. The five W's (who, what, where, when, and why) still satisfy the IRS best.

 

The law requires that business vehicle information be maintained in writing. The IRS regulations require that taxpayers:

 

  1. ". . . substantiate each element of an expenditure or use . . . by adequate records or by sufficient evidence;
  2. . . . adequate records are satisfied if the employee (taxpayer) maintains account books, diaries, or expense reports prepared at or near the time of use;
  3. . . . must establish the amount of each expenditure and its business purpose . . ."

 

Reporting vehicle mileage has been a tax return requirement since 1985, and without it the tax return is incomplete. Thus, the reported mileage should be supported with records, in the same manner that income and other deductible expenses are, in writing.

 

Every December, we provide Auto Log Books for the following year and Vehicle Information Summary Forms to clients we believe are impacted by this record keeping requirement. The Vehicle Information Summary Form is used to gather the data required to calculate the business usage of your vehicle and we ask that it be completed as close to year end as possible. All of this information must be reported on your tax return if you plan to deduct a vehicle as a business expense. Please return your auto log and vehicle summary with your tax information.

 

For 2016, the business standard mileage rate will be 54 cents per mile; medical and moving related mileage will be 19 cents per mile; mileage for charity will remain at 14 cents per mile.

 

If an Auto Log Book and Vehicle Information Summary have not been included with this letter and you would like to receive one, or if you have any questions, please call.

 

Clients need trusted, competent advisors. Take advantage of our expertise.

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