Business Mileage Woes

whodunit · #1 01/04/13, 11:00 PM

Sorry, this is kinda long...

DW has a couple endeavors we report as businesses. In one she must travel to the client's place and with another she sometimes has to pick up supplies or makes business-related trips, etc.

In the past I was under the the mistaken impression that the IRS had changed the way you calculated business mileage using a complex formula about when you bought the vehicle, the total mileage for personal use, etc. This was probably due to me using Turbotax since it asked about all that stuff. We didn't keep any records for 2012, since I usually just don't fret it thinking I wasn't really going to be getting that much out of it versus the hassle of keeping all kinds of records.

Now I understand that you can take a standard deduction OR use the formula for actual costs.

So, a few questions...

I have a general idea of the miles she traveled to get to the two client's places since they are pretty much every week or every other week. I can easily get the mileage from Mapquest of whatever.

Can I just do that even though I didn't keep actual written records? Some quick figuring shows we could deduct over $200!!!

As far as other business-related trips, I'm not too concerned since they were typically combined with personal business as well, so I would just skip those this year since they can't be estimated with any accuracy.

And that brings me to another question...

If I start keeping track of all this with written records, what is a guideline as to whether something is business or personal?

If she MUST go to the client's place every week and has decided to do other things at the same time to save time and gasoline, is that solely "business" and deductible? If she didn't have the client she would still make the personal trip at some point in the week, but if she wants to keep this client, she must do the work.

Same with business-related trips. If she has say a business-related event to go to which is on a specific date and makes arrangements to do other personal business is that still "solely" business and deductible?

Oh wait...one more question...

DW also occasionally works for someone doing labor AT a business. She is NOT on the payroll, so nothing is ever taken out of her checks. Is she technically "self-employed" and can she deduct the mileage to get to the employer's place of business? It would fairly easy to estimate this mileage as well.

Trixie · #2 01/05/13, 12:36 AM

I would suggest you get a CPA - they are worth it in the long run.

Don't take my answers as gospel as it has been years since I did our taxes.

It is true, or was, you either use mileage or actual cost. That can include gas, oil, repair, maintenance, insurance, and depreciation. Then determine the percentage of usage for personal/business. If you use mileage, I believe you are supposed to keep 'contemporaneous' records. Just keep a little notebook in your car.

We were audited 5 years in a row, and one of the questions they always asked my husband was 'did you ever stop to get a loaf of bread on the way home?'

Better ask someone for sure, but I don't think you can count mileage to and from a job - even a contractual job - as I would call the 'labor' job your wife does.

Not much help, but my best advice is get a CPA.

whodunit · #3 01/05/13, 01:41 AM

Thanks. It's again looking like it just isn't worth the trouble of messing with it. We're talking 300 miles for the vehicle she typically uses for that and when you go to add all the info they want the exact date the car was purchased (yeah, right), etc., etc, etc. Think I'll just suck it up and avoid the headache. Sad that they have made it so difficult.

DAVID In Wisconsin · #4 01/05/13, 07:40 AM

To deduct mileage you need proper records showing beginning and ending mileage along with the date and purpose of the trip.You can then deduct the IRS's per mile deduction without worrying about nearly as much paperwork. The trips must be for business purposes. Your wife cannot claim mileage drving to and from work.

fordy · #5 01/05/13, 07:57 AM

...........first off I don't think you can switch from milage deduction back to an 'Actual' expense(s) deduction on the business usage of a vehicle ! The very first calculation you must make is by taking total milage as the denominator and then calculate business miles as the numerator to give you a % ! If you have 40,000 total miles and 30,000 is business miles or 75% , then NON bus. miles is 25% .......the 75% are used too calculate your total business deductions , with EITHER Milage OR Actual expenses .
...........Actual expenses include items like depreciation , fuel , interest on the vehicle loan , insurance , repairs and maintenance , tolls and fees , local property taxes , license plates , etc .
............You should seek the help of a CPA too correct any mistakes you made in your initial calculations and get you set up correctly for subsequent years tax returns . , fordy

fantasymaker · #6 01/05/13, 10:09 AM

I think Fordy is right once you start with on way or the other you are locked in with that vehicle.

mnn2501 · #7 01/05/13, 10:17 AM

Quote:

Originally Posted by DAVID In Wisconsin

To deduct mileage you need proper records showing beginning and ending mileage along with the date and purpose of the trip.You can then deduct the IRS's per mile deduction without worrying about nearly as much paperwork. The trips must be for business purposes. Your wife cannot claim mileage drving to and from work.

If you are ever audited this is the type of records the IRS will want to see. The chances of being audited allows you some leeway.........
For the future get your DW a little calendar book or something.

fantasymaker · #8 01/05/13, 12:01 PM

Are you doing this on a form "C" ?

whodunit · #9 01/08/13, 12:15 AM

Thanks for all the help.

Yes, I believe it's Form C- if that is the business one.

The thing is that Turbotax asks about all kinds of stuff like date of purchase of the vehicle (and I mean FULL date), when it was placed into action for the business, beginning and ending mileage, personal mileage, commuting mileage, so at least with this software it's not just a matter of keeping track of business mileage and using the 51 cents a mile or whatever it is right now.

This is the first time I would be deducting mileage so it shouldn't be a problem, but I just don't think it's really worth it since she only makes maybe a couple thousand a year and 9 times out of ten the business-related trips are paired with personal trips and errands.

Trixie · #10 01/08/13, 02:08 AM

Again, I would suggest you consult a CPA -

An accountant can give you a lot of pointers - and give you the facts.

I wouldn't just drop it -

steff bugielski · #11 01/08/13, 04:54 AM

If you answer all the questions on Turbo tax you might end up with a bigger deduction. Those questions are so they can deduct the depreciation of your vehicle.

MoonRiver · #12 01/08/13, 07:01 AM

You only need the mileage log if you are audited!

There is no reason the mileage log can't be created now. As long as it is accurate, who cares when t was made. I don't log mileage for doctor's appointments, but at tax time I look up the dates for doctors appointments, trips to pick up prescriptions, dentist, etc and calculate mileage.

As far as combined personal and business use, I know what I would do. I would do it based on primary reason for trip. If I had to go to a client's office and stopped at the grocery store coming home, I would deduct the mileage from home office to client's and return.

I don't mean this as the correct way to do mileage today, as I haven't had to do this for about 10 years. But your chance of being audited are low and likely worse case would be they deny the mileage deduction. If it was me, I would include everything that I believe is legally deductible and create an ad hoc record if no other record is available.

Harry Chickpea · #13 01/08/13, 11:38 AM

I used to have to do a lot of traveling on the job, and every trip was logged in a day book with the place, time, reason, and mileage. In most cases, since the mileage was down the same routes to the same places, I just used a chart I had made, and logged the odometer readings when I filled the car up. Since in some instances, my employer paid me a mileage expense, I found it a profitable to be precise.