It's not uncommon for the total miles recorded in your business mileage log to be less than the total miles on your car's odometer, and in most cases, this is perfectly acceptable when filing your tax return. Here are some important points to consider:
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Personal vs. Business Miles: Your car's odometer records all miles driven, including personal trips, commuting, and business-related travel. When you calculate your deductible business mileage, you should only include the miles driven for business purposes, not personal or commuting miles.
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Documentation Matters: What's crucial is that you have accurate and well-documented records of the miles you actually drove for business. The IRS requires detailed records to substantiate your mileage deductions. This includes recording the date, purpose of the trip, starting and ending locations, and the number of business miles driven.
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Potential Red Flags: While it's acceptable for your business mileage to be less than your total odometer reading, having a significant difference might raise red flags during an IRS audit. The IRS might inquire about the reasons for the difference, so it's important to maintain clear records to explain any discrepancies.
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Round Trips and Non-Deductible Miles: Remember that only the miles driven for business purposes are deductible. If you have round-trip business journeys (e.g., from your office to a client's location and back), you should only count the one-way distance. Commuting miles are generally not deductible, so they should not be included in your business mileage log.
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Personal Use Percentage: If you use your vehicle for both personal and business purposes, you'll need to calculate the percentage of business use. This percentage is used to determine the portion of your vehicle-related expenses that are deductible.
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Consult a Tax Professional: To ensure that you are accurately calculating and reporting your mileage deductions, it's a good idea to consult with a tax professional or accountant. They can help you navigate the rules and guidelines specific to your situation and provide guidance on maintaining proper documentation.
In summary, it's acceptable for your business mileage to be less than your car's total odometer reading, but accurate and well-documented records are essential. Ensure that you are only deducting the miles driven for legitimate business purposes and not including personal or commuting miles. If you have any doubts or concerns, seek professional tax advice to help you with your tax return.