John R. Bullis: Keeping a record of business miles
If you use your vehicle for business driving including driving to manage and care for your rentals, the “Standard Mileage” method will give you good tax savings. In 2019, the IRS allows $.58 per business mile. For example, if you drove 1,000 business miles in 2019, the deduction is $580.
The usual problem is keeping a detailed log of all business driving every day of the year. That is time consuming and a bother.
IRS allows you to use a “Sample” method. If your driving is fairly consistent every month of the year, you can keep the detailed log for three months. Then use the result for three months to compute the total business miles for the year. For example, if the three months log shows a total of 3,000 miles for the three months, then using 12,000 miles for the year is allowed by IRS.
There are some basic requirements to observe. You need to use the vehicle for business use. That includes driving to and from the bank, the post office, to buy supplies, to check on the work, etc.
The three-month mileage log will show how much of the time the vehicle is used for business. For example, if you drove 4,000 miles in the three-month sample period and 3,000 miles were for business, then 75% is a good estimate of the business use of your vehicle. That can be very important if you use the “Actual” expenses (depreciation, gas, maintenance, repairs, tires, etc.).
You need to keep the invoices and paid bills to show the vehicle use is about the same all year long.
There are two ways to claim business expense for vehicle use. The Standard Mileage is the business miles driven in 2019 multiplied by 58 cents per mile. The Actual expenses can be used. The total actual expenses are multiplied by the percentage of business use to figure the deduction.
If you have an office in your home (an area of regular and exclusive business use), then driving from the home office to other business locations qualifies for business driving. A few folks have indicated they did not claim any deduction for office in the home, thinking that would increase the chances of an IRS audit. The deduction for office in the home is normal, does not cause an IRS audit and can save a lot of taxes over the years. You just have to meet the other requirements for a home office.
Maybe keeping a three-month sample log of your business driving would be worth the trouble?
Did you hear “No wonder young people act confused. Half the grown-ups insist they find themselves, and the other half keeps telling them to get lost.”