All About Mileage Log Audits

How Often Do Mileage Log Audits Happen?

By now, you should be aware of the myriad benefits mileage logs can offer you or your business. For one, they are particularly instrumental in mileage tax deduction claims. The problem is, some taxpayers tend to abuse mileage deduction and have roused the eagle-eye of the IRS. Well, you know how that goes. Dealing with IRS audits can be a kick in the butt.  It isn’t surprising that most people cringe at the mention of IRS – audit or otherwise.

What might be oblivious to many is the root of the problem. Why is mileage deduction susceptible to IRS audit? This not-so-new question bugs many innocent business owners. Nowadays, most online tax forums are awash of laments and complaints about mileage log audits. So let’s dissect and examine the good, the bad, and the ugly of mileage log audits.

The Bad

Most small business owners who claim mileage deduction have so many business-related engagements that they have little or no time for bookkeeping.  Just think about it; as and when do plumbers, electricians, truckers, and other small business owners have a chance to log their miles?  Ask any seasoned tax lawyer – and you will discover that an insignificant number of people actually log mileage.

That in itself isn’t surprising at all. With all the driving, installing, plumbing, roofing, and whatnot, these small business owners are short on time and energy for accounting and bookkeeping. Heck, bookkeeping is a professional job in its right.


The Ugly

The problem is, IRS officers, and the tax code itself, call for proper and organized documentation, of which in this case is the mileage log. When tax season beckons, these business owners hit the panic button. Without concise mileage logs, they resort to the next big thing: memory and guesswork. A quick look at many Schedule C entries shows that many business owners go for numbers that end in a couple of zeros. And that is where the problem lies.

IRS has been onto mileage deductions for quite awhile now. In fact, it’s one of the most targeted lots in audits. Who is the biggest hit? People who report huge numbers but their businesses doesn’t require much traveling are major target for the IRS

The Good

You be glad to know that mileage log audits don’t take a pass at your deductions, but rather provide an avenue for you to give IRS more information about your deduction. Apart from few individual cases, agents just confirm your business location online, and you are ready to go. As if that isn’t easy enough, businesses with typically high mileage like real estate agents breeze through the audits.


You Might Also Like