I am a tax preparer.
You can claim standard mileage or actual expenses. You will probably come out much better using standard mileage with 18,000 business miles. If you used standard mileage the first year you put this vehicle in service for business, you can use standard or actual mileage in later years for that vehicle. If you used actual mileage the first year you put this vehicle in service, you must use actual mileage in later years for that vehicle.
You must document all of your vehicle expenses. For standard mileage, record your odometer reading on Jan 1 each year so that you can compute total miles. You must also keep a log of of the dates, purpose, and miles traveled for business use and miles traveled for commuting. It is also a good idea to keep maintenance records that have the odometer reading such as oil changes.
The IRS is getting a lot stricter on business vehicle expenses.
The IRS knows that you are fudging the mileage number because you made the mistake of using a round number like 18,000. You are less likely to receive an IRS letter if you use a number like 18,357. Is this the actual number of miles used for business or is this a guess pulled off the ceiling? I just finished an offseason tax class on vehicle expenses. Round numbers used for standard mileage was pointed out as a reason for the IRS to flag a return.
If 18,000 is the actual business mileage and you have documentation to prove it, you have nothing to worry about. Otherwise, the IRS will disallow your standard mileage and you will have to pay back some money plus a penalty.
I hope this helps.
For all out there I am hearing more audits this year than I ever heard from Middle Class people in my life, be very carful out there.
My ACTUAL mileage for the year was 21,397. Foolishly I took advice from a co-worker who said to round it to a lower number because the real mileage would draw attention!
My ACTUAL mileage for the year was 21,397. Foolishly I took advice from a co-worker who said to round it to a lower number because the real mileage would draw attention!
I just put in my 2010 taxes. Thank goodness I didn’t round the numbers!
And I think I better start keeping a log again (independent contractor). I used to keep a log. Use my truck almost exclusivly for work. For three years in a row I was within 1000 miles a year for total driven, and was 86% to 89% work related based on my logs. I’m still within that 1000 mile a year mark, and the past two years just use a factor of 87% because I was lazy.
Lazy probably doesn’t cut it on an IRS audit though.
Everything else has receipts though.