Contemporaneous Mileage Log REQUIRED for Mileage Deduction

The IRS does not allow deductions for estimates of mileage.  Mileage records must be meticulously maintained.  The preferred method of maintaining mileage records is in a mileage log or calendar.  This documentation of mileage must be made contemporaneously in order to be accepted by the IRS, not reconstructed at a later date if you happen to be audited.  Only legitimate business purpose miles are deductible.  No matter your profession, commuting miles are never deductible. 

Commuting is the distance traveled between your home and your regular place of work.  These commuting miles are never deductible regardless of your method of transportation.  In order to deduct business miles you must be driving for business purposes outside of your regular commute.  If you have a qualified home office and this home office is your primary place of business then you may deduct driving from your home to meet with clients.  If you have a regular office outside of your home, you may deduct the travel from your regular office to your client meetings. 

If you have no regular office and no qualified home office, the location of your first business contact is treated as your commute and then the additional business miles for that day will be deductible, minus the drive home.  Mileage between your last business stop and your home are also considered commuting miles.  Therefore, if you only went to one business location per day, you would have no deductible mileage.

There are many apps available for smart phones that can help you track your mileage unless you prefer the old fashioned paper log book.  Just remember you must include the business purpose of the meeting along with the name, date location and total business miles no matter what method of tracking you choose.  

You must also document your total miles driven throughout the year, you must have an odometer reading for the beginning of the year or the date you place your vehicle in service for the tax year and an ending mileage for the tax year or date you dispose of the vehicle.  It is best to have an odometer reading from an external source such as a repair shop.  Try to get your oil changed, tires rotated, or smog checked as close to the first of the year as possible. 

This business mileage deduction can really add up at the 2013 standard mileage deduction rate of 56.5 cents per mile.  If you choose to use the actual expense method, you still need to maintain this mileage log because only the percentage of business use of your vehicle qualifies for this actual expense deduction. This deduction can be a substantial business expense.  If you only drive 100 miles per week for business, that is almost a $3,000 deduction.  How much do you drive for business?  Is it worth the few minutes it takes to document?

Will you prepare your own taxes this year?

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There are so many demands on our time that it is impossible to be an expert in every facet of life, this is why we specialize.  Although many people are comfortable preparing their own taxes, others would prefer to outsource this important responsibility.  If you choose to outsource, find someone who is educated in current tax law to help you pay the least amount of taxes as required by law.  Someone who you can trust to represent you in case of an audit, and help you maintain adequate substantiation of your deductions.  I am a Las Vegas native with strong ties to this community, you can count on me to be here throughout the year for all your tax needs.

How responsible is your tax preparer?

The tax preparation industry is highly unregulated, so it is up to the tax payer to ensure they are receiving quality representation.  There are many large, reputable firms in Las Vegas that train and compensate their employees well.  However, there are some busy tax franchises that just carry a large amount of insurance to cover the errors their that underpaid staff may make.  A tax office can be busy because they are dealing in quantity rather than quality.  Would you rather have your return prepared correctly the first time by a qualified professional?  You should never be charged an additional fee to cover you in case your preparer makes a mistake on your return.

Please be weary of some of the assurance policies offered by tax preparation companies that charge you an additional fee to obtain. You are generally only covered by this add-on if the preparer makes an error, but not if you omit or overlook some information. Those assurance policies generally do not reimburse you if a poorly educated preparer does not take a deduction you could have qualified for.  Remember: you only have 3 years to go back and receive a refund you were entitled to from the IRS.

All of the tax professional's that I network with carry insurance that will cover their client's penalties and interest in case of a mistake, and the client does not pay extra for this either. This professional liability insurance is commonly referred to as errors and omissions insurance.  Since the tax preparer industry is so unregulated, find out how many years of experience your preparer has and if they choose to obtain continuing education. A responsible preparer will take at least 15 hours of continuing education each year.  Make sure your preparer is educationally responsible and stays abreast on the changing industry regulations.