If you use your vehicle for your business, make sure you deduct the expenses ordinary and necessary for your business, as well as ensure that they are properly documented. For example, now that 2016 is almost behind us, here are some tips to make this job a little easier:
1. Don’t forget to document your vehicle’s year-end odometer reading! Better yet, schedule a vehicle service so that you have an official odometer reading from the mechanic. Tip: the IRS loves checking repair bills to verify odometer readings and mileage.
2. Review your business mileage log, checking it against your calendar or day planner, to make sure you didn’t miss anything. If you don’t like keeping mileage logs and your business driving is pretty steady year-round, the IRS will allow you to just keep a mileage log for 90 days (come on, you can do THAT), and then multiply it by 4 to get an annual business mile reading.
3. Try to keep just one credit card EXCLUSIVELY for your business, so that, at year-end, you can download a year-end summary to help with your tax document preparation. All of your vehicle expenses should be on that card (or, if you use public transportation, all of those expenses should be on the card). This will also help with your other business expenses, such as meals and supplies, etc.
4. Even if you’re a cash-basis business taxpayer, expenditures paid with your credit card will count for that year, even if you don’t pay the bill until the following tax year. Just make sure you don’t double-dip. 🙂
5. If you have any questions, always check with your tax professional!