[ad_1]
Exactly tracking vehicle mileage is often overlooked in small business accounting and tax preparation. Often, either the mileage is sufficiently due to lack of data or the fear of being audited, or it is over-reported also by the lack of data, or “I know how much I drove” attitude.
Although it is best if taxpayers have a small notebook in the car to take the actual odometer readings every time a business trip is done, this is cumbersome, and most people do not want to do it. Accurate records are a must, the mileage deduction shall be able to stand up to scrutiny if the IRS audits.
Quick Books can help. Use the following steps to create and vehicle mileage.
1. If you do not have any mileage records already recorded in QuickBooks, proceed to step 2. If you have a few records mileage recorded in QuickBooks, go through them and make sure everybody has a destination listed in the Notes field, such as “ABC Printing” (from the Company menu, select Record Vehicle Mileage, then page through the records to stop them). Then, create a Mileage by Vehicle detail report (from the Reports menu, select Jobs, Time, & Mileage, then choose Mileage Vehicle Detail). In the Date field, choose this tax year. Using the Edit button, eliminate all columns except vehicles, with the closing date, Total miles and Notes. Print.
2. Create profit detail (from the reports, select the company and financial, the Profit & Loss Detail). Set the date range for this fiscal year to date. Using the Edit button, eliminate all columns except the type, date, title, memo and amount. Print.
3. If your business is made where driving to see clients, create a Transaction List by Customer report. From Reports menu, select customers and accounts, then select Transaction List of Customer. Using the Edit button, select Filters tab. The filter box, select the item type. Change entry type from all accounts. Click Ok, then print the report.
4. Compare reports. Look at each line to see if it represents a place you drove in fact, either to buy something, have rendered services or perform work for a client. If there are missing destinations in Mileage Vehicle report, enter them (the club menu, select Enter vehicle mileage). Do not forget to include the destination in the notes field. Consider using one of the online map sites (such as Yahoo! Maps or MapQuest) to create printed information on the distance between the office and the destination. Vista reports and printed map information for the file tax.
Cave
I am not asserting that this method will certainly stand up to IRS scrutiny. However, this is certainly better than to leave a review without mileage records. Here’s a quote from IRS Publication 17, 2004, from page 193, where it covers the complete files: “Documentary evidence usually considered adequate if it shows the amount, date, place, and the essential nature of the expense.” As long as you can produce a receipt or invoice showing the travel and map information shows the distance, this approach meets these requirements.
Nobody wants any deduction of disallowed for lack of evidence. If you do not want to use mileage laptop in the car, this approach will help to ensure that all the mileage you do claim is well documented.
[ad_2]