The IRS has stringent rules regarding taxpayers. In the case of using your business car for work, you must be able track everything perfectly. If you don’t, the IRS will not allow you to deduct expenses.
If you plan on deducting the miles you drive to attract and meet prospective clients, you would have to keep an accurate record of your travel. This would include:
- The amount of business mileage for each business us of the vehicle you used
- The total mileage (related to and not relating to business) of the vehicle you used during the taxable year
- The dates and times of each business use of the vehicle
- The purpose of each use of the vehicle.
If you fail to keep an adequate and accurate record of these things, then you will most likely not be given deductions by the IRS. Let’s look at a recent case revolving around this topic.
In 2011, a CPA deducted over $22,000 in business travel expenses for the year 2009, claiming that he drove 40,000+ miles for his CPA business, meeting potential new clients. The IRS only allowed a deduction of about $400, due to him being a couple years late and not having the correct records.
The CPA decided to go to court and try to come closer to the amount of the original deductions, only asking for $4000 the second time. His defense of these business travel expenses consisted of a calendar and print outs from MapQuest.
The Tax Court found that this evidence was ludicrous, explaining the reports:
- Were not kept in a contemporaneous manner
- Were created too far after the alleged dates of travel
- Could not establish the purpose of travel
- Did not establish business mileage
The Tax Court checked off every one of the boxes and the CPA ended up losing their case.
Capturing Mileage to expense may seem like a tedious job, especially if your schedule is constantly full. MileIQ was created in order to alleviate the problems associated with tracking business travel. 55 million U.S. workers have the ability to expense the miles they drive. Using MileIQ comes with features that make it very user friendly. Some of these features include:
- Automatic drive detection which logs the mileage and times that you drove
- Classification of travel into categories to keep up-to-date records
- Full Reports where it takes all of your data and creates a through report for you and your business.
If you spend a lot of time on the road, give MileIQ a shot to do the tedious work so you can focus on landing your clients.
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2 comments on “How To Protect Yourself From The IRS On Travel Expense Mileage – Free Mile Tracking App”
I find some of the articles very useful…however, you need a better proof reader!! For example, “If you plan on deductive the miles you drive…”. I would plan on deducting.
Changed. Thank you.
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