Keeping a mileage log

27 August 2013 / Video Blog / Comments Off on Keeping a mileage log

Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax and today we're going to talk about what goes in your mileage log. In order to prove your deduction to the IRS we have to be able to show the IRS a log of your business miles. What we can't prove, we lose. So in a business mileage log, it needs to have several columns, the one that I recommend. It has a date column, it has a destination column to let the IRS know where you went, it also has a business purpose column, so that we can tell the IRS why we incurred this business expense, very important because deductions are not deductions until we can prove it had a business purpose. There is also a column for expenses. So if we are paying tolls, as we're driving to places, we can make notes in the mileage log. Now we talked previously about how we should never pay cash for expenses, a lot of people pay cash for tolls. If you're doing that you're going to need to keep the receipt you get from the toll booth, and write the business purpose right on that receipt. What we'd recomend is to sign up with your states toll provider. For example in Florida, it's called SunPass, it's a little transponder that we put on our car that tracks our tolls as we go through the toll booths. So at the end of every month, we can download the amount of toll expenses we have and we can expense the business ones, and we can ignore the personal ones. Your mileage log is the only way to prove these deductions to the IRS and like I said previously what you can't prove, you lose. So no matter which method you're using: actual expenses or mileage, the mileage log is critical to surviving an audit. This concludes today's Tuesday Tidbits, see you next Tuesday! Widget Bookkeeping & Tax, Know More, Keep More!

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