In this installment of Ask The Tax Expert, readers ask about the details required by the IRS for your mileage log book. Our tax expert also answers a question about a mileage deduction if you use multiple vehicles.
Q. How specific do I have to be when it comes to my mileage log? I know I need the date, distance and business purpose but do I also need the exact end-to-end business names? Will the IRS accept a mileage log that doesn't show the business names that I cold call?
- Marc F., Fort Worth, Texas
A. You don't have to include the full legal name of the businesses you visit. It's sufficient if your records include a shortened name, abbreviated name, or even a nickname, of the companies you visit. You just want to be able to include enough information so you can identify the business you visited if an IRS auditor has a question about it.
The IRS also wants:
Q. I drive 2 personal vehicles for my business, mostly running errands for the business and working at temporary sites. My vehicles are also driven by my wife for personal drives and because she doesn't have my phone with my MileIQ account, those personal drives are not tracked. Therefore, there are several chunks of undocumented personal miles driven on the vehicle. It's my understanding that the IRS wants to have personal miles logged as well as business miles. Is there any simple way to account for this?
- Gabe, South Bend, Indiana
A. You do not need to keep a record of your nonbusiness driving. It's not deductible so the IRS doesn't care about it. You need to keep a record of all the driving you do for business. You also need to know the total miles you drive each car during the years, which includes your business and nonbusiness driving. To determine this, make a note of each car's odometer reading at the beginning and end of the year. Subtract your January 1 odometer reading from your December 31 reading and you'll know your total miles.
Our resident small business tax expert, Stephen Fishman, is here to answer your small business tax questions.