Mileage Log-A Must to Sunstantiate Your Tax Deduction

July 7th, 2023 at 2:59 PM

I am writing today to bring to your attention a crucial aspect of business tax deductions: mileage logs.

In most court cases, taxpayers lose vehicle expense deductions because they cannot present a credible business mileage log. The IRS code forbids deductions for vehicle expenses when taxpayers cannot prove the mileage and provide an adequate record.

Failing to maintain such records could lead to deductions far less than the actual business mileage, potentially resulting in no vehicle deductions at all. In essence, having a mileage log is critical for both proprietors and corporate owner-employees.

Take the case of Jim and Martha Flake. During their IRS audit, they submitted reconstructed calendars, odometer readings, fuel receipts, credit card statements, and other documents. But they created the mileage after the fact, and it contained math errors, thus failing to establish the mileage, time, and purpose of each vehicle use.

The court looked at the Flakes’ work and denied their vehicle deductions entirely. It allowed only what the IRS allowed.

The key takeaways from this case are:

• Maintain a mileage log to substantiate your business mileage.
• Stay updated on the basic principles of tax law.
• Operate your business with proper books, checks, records, and receipts to verify income and expenses.

Mark S. Fineberg, CPA