Can I deduct my auto expense?

Many time my clients will ask during their tax interview about deducting their auto or truck expense. When I ask if they have a log documenting the business use of the vehicle, most will say yes, and hand me a spreadsheet, a calendar, or some other record of their use of the vehicle. But I am still surprised at those who still show up without a clue as to what I am talking about. “Oh, I guess I use it about 90% of the time.” I sometimes turn and look over my shoulder at the ceiling. That’s where they are looking. They must keep some record up there.

For many years the IRS has required a auto log showing the business miles of a vehicle as well as any commuting, personal miles and the total miles for the year. While originally they required that the auto log be kept daily, they now accept a reconstructed auto log. The problem with a reconstructed log is it is prone to errors and omissions of some of the use. Although it takes some self-discipline, and resolve, once the habit is initiated, it will become a matter of routine. There are numerous computer programs that can help you to post your mileage on a daily basis. A spreadsheet may be utilized, or if you are old-school, as many of my clients are, a small calendar with the mileage written daily will work.

If you should find your self in a situation like the person above, trying to find your mileage on the ceiling of my office, you can always reconstruct using your invoices showing where you went and who you talked to or the stores that you shopped at. Use MapQuest or Google maps to look up the mileage from point to point, and write down in the logging system that you are going to be using for the coming year. You may miss some of the wandering around miles looking for a particular business. Yes, that wandering mileage, while wasted time, is still business time. If you can reconstruct 3-4 representative months that truly reflect the average months for the year, sometimes that may be annualized for a yearly log. It’s best to keep the log daily and if you want to deduct any of the vehicle you must have an auto log.

If you need help with suggestions for maintaining a contemporaneous auto log or ideas for reconstructing one please let me know.