Are You Keeping Track of Your Auto Expenses in Writing?

Are You Keeping Track of Your Auto Expenses in Writing By Stephen J. Ganns{3:00 minutes to read}  If you own a small business there is a good chance that you are using a personal automobile for that business. In fact, you may even have purchased the automobile through the small business.

In either case, you are now faced with the daunting task of keeping proper records. The IRS demands that in order to deduct automobile expenses for a business you must have WRITTEN documentation, this documentation must be kept contemporaneously at or around the time of the expense.

Or to simplify. The IRS demands that you keep some sort of log of your mileage in order to determine what percentage you are using the automobile for business. Once that percentage is established, for example 82%, then we can take 82% of gasoline, insurance, repairs, car washes, etc. We can also depreciate 82% of the vehicle.

How do we keep these records?

At the beginning of the year or at the time you start the business, you must record the automobile’s odometer reading. You must also record the odometer reading at the end of the year. The difference between these two readings will then easily give you the total mileage for the year.

On a day to day basis, you must write down how many miles you drive for business.  As many of us know, commuting from your home to your office is not considered business mileage (unless you have a home office). However, any trips after that are business mileage. Record the number of miles and any expenses you might have such as:

  • Gas;
  • Tolls;
  • Parking;
  • Etc.

Add up the mileage for each week, and at the end of the year, you will have a total of business mileage. Since you previously computed your total mileage, you will be able to calculate the business percentage.

Apply that percentage to all your auto expenses and that will give you the amount you can deduct on your tax return.

To reiterate, you must keep a written log in order to deduct these expenses. On every tax return where you deduct auto expenses, you will be asked:

  • Do you have records to support the expenses?
  • Are these records in written form?

If you have any questions concerning deductions and record keeping for automobile expenses, please consult your tax adviser or feel free to give us a call any time at 914-682-7007.


Stephen J. Ganns

Stephen J. Ganns, CPA


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