Hey Mileage Ace,
I do not a get mileage reimbursement for my job in medical supply sales. I do not keep a daily report of my driving but typically average 30k miles a year due to all the back and forth trips I take to multiple appointments daily for work. I claim 20k of those miles for work. Will this be okay?
– Justin from Texas
Sadly, no. If you are audited by the IRS, it is not likely they will accept a rough estimate to validate your business miles. Vehicle expenses is an area that are frequently audited, and the requirements to substantiate your claimed miles are very specific.
If audited, the IRS will require a log verifying the business use of the car. If you haven’t kept a log throughout the year, this can be a problem. But don’t panic! They will allow you to re-create your log as long as you have substantiating evidence.
What does that mean? An appointment calendar, receipts from business locations, service records that back up your odometer claims. Essentially, a LOT of paperwork and effort on your side. This log will need the following information:
Dates, total mileage per trip, where you went (locations), and the business purpose of the trip. Adding whom you met with (clients/vendors, etc) can also help when an auditor is scrutinizing your log. Remember, a back created log will always look more suspicious than one that was made contemporaneously.
A few items of note – unless you have a home office, any mileage to your first business location and from your last business location to home, is generally considered to be non-deductible commuting mileage. However, before you write off those miles, you should speak to your tax professional about the pros and cons of claiming a home office.
Also, any miles you cannot substantiate with contemporaneous records will be considered personal miles, and are therefore non-deductible. The IRS will disallow those miles. Many people who have suffered through an audit can attest that this can be a substantial portion of your mileage deduction and can drastically raise your tax burden.
And lastly, if you are not paid as an independent contractor, the IRS may require an employer letter stating that you are required to drive for your job and that they do not reimburse for the expense.
The easiest way to stay in compliance with the IRS is to use a GPS mileage tracker like The Mileage Ace. With little effort, you can use our device to automatically track your trips and autofill in the details auditors require. It takes the guess work out of back filling a log and captures more business miles than apps because of it’s increased accuracy.
We hope you find this information helpful.
– The Mileage Ace