Now is the time to begin logging your business travel miles if you want to take a tax deduction for 2015.
The IRS requires strong substantiation – even if it is obvious that you use your vehicle for business purposes.
Estimates are not acceptable. Each business trip should be documented with destination, purpose of trip, date, time and number of miles driven. Business driving must be separated from personal driving.
If you haven't been taking a deduction for your business driving, 2015 is a good time to start because recently released standard mileage rates are attractive considering the decrease in gas prices.
Effective Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup truck or panel truck will be:
- 57.5 cents per mile, an increase from 56 cents per mile in 2014
- 23 cents per mile for medical or moving purposes, down from 23.5 cents per mile in 2014
- 14 cents per mile driven in service of charitable organizations (the same as last year, fixed by Congress)
Taxpayers also have the option of deducting vehicle expenses based on actual costs of using a vehicle rather than standard mileage rates.
When filling out your 2014 tax returns, remember to use mileage rates that applied for 2014. And don't forget that, in the event you are audited, your mileage expenses must be documented in detail or they won’t be allowed.
If you don't have strong enough substantiation and are audited, the IRS will in all likelihood deny your entire deduction. And to make matters worse, you'll probably also be charged penalties and interest for overdue taxes.
If substantiation of auto expense records is lost or stolen, the IRS will generally also deny the deduction.