There are two methods a business can use to track and deduct Auto Expenses for tax purposes. No matter which method your business chooses, it is imperative to use an auto log. Smart phones are now the easiest and most convenient way to track auto use for business.
We recommend going with Method 2 (Mileage) for most businesses, as it is the most reliable and least likely to be challenged by the IRS.
It is important to remember that you must stick with the method you choose throughout the life of the vehicle – you cannot start with one and switch to the other. Be aware that commuting miles are personal miles, not business miles, and therefore not deductible. The business must have the vehicle on the books – owned or leased to deduct any auto expenses. If you file a return that includes either personal miles or a vehicle not on the company’s books, you can expect a notice from the IRS.