If your answer was yes you are not alone. However, record keeping does not
have to be complicated or time consuming. Effective record keeping should
be simple and convenient. Poor and sloppy record keeping does cost you
money!
If you use your automobile for business
keeping a mileage log takes less than one minute and once the
habit is formed it may save you hundreds of dollars in taxes.
A mileage log need only consist of the business miles driven,
the date, destination/business purpose, and total miles driven.
You do not need any special format, however, I recommend using
a spiral notebook that stays in the vehicle and labeling the
top of each page as follows:
|
Date
|
Destination/Purpose
|
Miles
|
On December 31 or January 1 of each year
make a notation of odometer reading and daily commuting distance.
By making this notation each year the personal and commuting
mileage can be easily calculated.
The law allows you to deduct the business
use of a vehicle using the standard mileage rate ($.36 for 2003)
or actual expenses, whichever is greater. If you use the mileage
allowance the only other expenses related to automobile use that
is allowed are parking and toll road fees. If you also to keep
tack of actual expenses, be sure to include all expenses: gas,
repairs & maintenance, car washes, parking, insurance, interest,
toll road fees, and depreciation, the percentage of business
use to total use must be applied to the total of all expenses. Keeping
track of actual expenses does not eliminate the need to keep
a milage log. It is not necessary to keep every little receipt.
For small expenses such as toll road fees, parking, etc. you
may note it on your mileage log for record keeping. You are required
to keep receipts for purchases greater than $75.
Employees are allowed to deduct vehicle
expenses that are not reimbursed by the employer as a miscellaneous
itemized deduction. Miscellaneous deductions are subject to the
2% rule.
Self-employed individuals are allowed
to deduct vehicle expenses as any other normal business expenses.
