22 May Realtors Cautioned on Mileage Deductions on Tax Returns
A client came to us when he found out he was being audited by the IRS. He received the dreaded IRS notice in the mail, demanding he bring his books and records for the tax year in question down to the Federal building in Columbus.
Turns out he claimed over 50,000 miles in mileage deductions for his Real Estate practice, and had very little documentation or other supporting evidence to support his deduction, and ended up writing the IRS a check for over $20,000. And that’s with us trying to re-create as much of his records as we could in the short time we had to work his case!
Because of incorrect mileage deductions, the IRS went after him!
Even though our work saved him over $10,000 during the course of his audit defense, if he would have kept daily records of where he went (and not grossly overstated what was probably his true mileage!), he would have been okay.
We recommend clients keep a daily log of all automobile travel, either in an old-fashioned pocket notebook, or use the Mile-IQ or other smart phone app that tracks your mileage automatically. Remember, with the IRS you are guilty until PROVEN innocent and the taxpayer must document all expenses! If you want more details on mileage deductions, here is a helpful guide.
If you require any help on keeping track of your mileage deductions or need any help preparing your tax return, call us at 614-524-4888!