NO, I NEVER WANT TO MEET THE IRS!

To receive an unexpected meeting request from the IRS is not a good sign for most people.

As a business owner, it is important for you to keep meticulous records of your expenses, your P&L reports and your income statements and any other information that will need to be reported to the IRS at the end of the fiscal year.

If you travel for your business, it is also imperative that you are scrupulous when it comes to reporting the number of miles you travel back and forth. Manual recordkeeping of this activity can easily become distorted when you lose track of some of the trips that are all needed for keeping a complete mileage log.

One of the principal things you will want to do to keep your mileage log correctly is to be confident that the mileage distance you are recording is absolute and error-free. You may not be able to achieve this goal if you are recording this activity manually. The number of miles that you record needs to match up with your yearly odometer readings and your business activities before you are turning this information into the IRS or your organization for reimbursement.

One of the things that can greatly assist you is an app that will accurately record the number of miles you are traveling back and forth every time you need to make a business trip. This app can be downloaded on any of your smartphones, and it will run seamlessly in the background, while accurately tracking your actual route. The app effectively tracks your driving activity and will allow you to flawlessly obtain the highest, accurate reimbursement of miles that you have driven between stops.

If you are not careful, your mileage log can become easily lost especially when you may have jotted your trips down on random pieces of paper because you were in a hurry or get distracted. Now you have put yourself, in the middle of a guessing game, where you have either overestimated/underestimated your miles. If you are an honest person and since this information needs to be shown to your accountant and possibly the IRS in the case of an audit, then you will probably play it safe and underestimate your mileage.

One of the nice enhancements about these apps is the fact that they are current with the standard mileage rate that the IRS has published for deduction. Therefore, you do not have to worry about overestimating your expenses and having your calculations differ from that of the IRS. We all know that the federal government has set in place very rigid guidelines regarding the record keeping of your mileage log. When you capture this information on the IRS form, you have to know what items are going to be counted for reimbursement and what items are insignificant. You must be sure that you are not mixing a computation related to a business venture with a personal road trip. These apps do the math for you automatically.

For instance, speaking to a client on the phone when you are in route to the grocery store is not to be considered a business trip, even though the business might be the topic of your conversation. However, there is one minor nuisance to using a tracker app and that is the fact that they have a tendency to drain your battery when they are in use. So, with that said, it is a good idea if you drive a lot to use a cheap USB car charger. Just 30 minutes charging in the car can bring back battery to 100%.

Keep in mind that it is best not to be sitting across the desk of an IRS auditor trying to explain why the reimbursements you received for your mileage has far exceeded the amount that it should have been. It is much better to play it safe when it comes to your mileage and allow a tracker app to accurately calculate the distance you are driving between your business locations.

Frederick W. Daily, J.D, LL. M (tax)
Frederick W. Daily, J.D, LL. M (tax)

Fred Daily is a tax attorney with over four decades of experience in the tax field. He has given tax programs for CPAs, Enrolled Agents and even the IRS. Fred has been quoted in the New York Times, Wall Street Journal, and has appeared on CBS, NBC, Fox, NPR news features and ABC’s Good Morning America. He is an author of books on taxes and his website, taxattorneydaily.com features a wealth of tax tips for minimizing taxes and dealing with IRS issues.