How to Substantiate Deductible Mileage by Karla Hopkins

The Internal Revenue Service designates standard mileage rates for tax deductions for individuals. The standard business rate was recently increased to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011. The intent of the standard rate is to simplify the amount of record keeping that must be done to accurately reflect the vehicle expenses.

Individuals have the option to use the standard mileage rate OR to track all vehicle expenses. You can NOT deduct both. Therefore you must choose a method of accounting for your vehicle expense and then apply it consistently. If using the standard mileage rate, you MAY NOT deduct gas, repairs, insurance etc. When electing to use actual expenses (i.e. gas, repairs, insurance), the business use percentage is applied to the costs to determine the deductible amount.

The business use percentage is found by comparing total business miles to total vehicle miles for the period. Business miles are those driven from one job to another, but NOT commuting between a house and a job. The first leg of your daily journey and your last are generally defined as commuting miles and therefore not deductible.

Standard rates are also established for other driving purposes. For example:

The distance driven to perform charitable work is deductible at the 2011 rate of 14 cents a mile.

If you drive for medical care, you can deduct the mileage at a 2011 rate of 19 cents a mile from 1/1 to 6/30/11 and 23.5 cents per mile from 7/1 to year end 2011.

Tolls and parking fees are also deductible.

To claim the standard rate deduction, you must keep an accurate record of where you have driven, the purpose for driving and the date of the driving. Pursuant to IRS statute, if the IRS finds that the documentation is inadequate, they can deny 100% of the deduction regardless of whether you incurred transportation costs. Therefore it is important to know the substantiation rules and to maintain complete and timely records of vehicle usage. The IRS considers the following as adequate documentation:

For the amount of a vehicle expense such as a repair, you need to have the cancelled check and the receipt from the vendor that includes the date of the service.

For the mileage, you need a log book for each mile that the car is used during a given day, week, and year which includes the mileage from one place of business to another and the purpose of the business trip. If you make multiple stops on a given day, the log should list each trip separately. On an annual basis this log should be totaled to calculate the total business and personal usage for the year which can be applied to the actual costs if you choose that method for deductions.

Many office supply companies such as Staples, have IRS approved log books available and we highly recommend you use them and keep them in your vehicle at all times. There are also electronic devices now available to track your vehicle miles using technology similar to a GPS device.