# Business Auto Deduction Mileage or Actual Expenses?



## sqkcrk (Dec 10, 2005)

What do you all use? My accountant says that if I start using the Actual Expenses Method I can't switch to Mileage. But if I start with Mileage I can switch to Actual. 

What method do you Commercial Beekeepers use and why?

Over the last ten years I have been taking the Mileage Deduction. This last year If I took the Actual Expenses I would have $6,000.00 more in deductions.


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## Michael Palmer (Dec 29, 2006)

I use actual expenses. Always have.


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## sqkcrk (Dec 10, 2005)

Thanks, Michael. I think I need a different Accountant.


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## funwithbees (Mar 27, 2010)

We use actual also. Mileage seems to apply if you also use your vehicle for a lot of personal use, other than bee related. 
Nick
gridleyhollow.com


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## Tenbears (May 15, 2012)

I use actual, I am no longer consider myself commercial beekeeper, More a sideliner, but it ties in well with my other business' to use actual.


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## Barry (Dec 28, 1999)

Actual. Way too much record keeping to use mileage.

If I were you, I'd amend my 2015 tax return and use actual expenses.


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## sqkcrk (Dec 10, 2005)

Barry, when it comes to mileage, all you have to do with a truck used solely for the business is to record the odometer reading each Dec. 31 and do the math. I can see it being difficult with a multiuse vehicle.

Good advice. We are using the actual expenses for 2015 on my 2005 truck.


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## Hartz (Sep 4, 2010)

Your accountant is correct; if you take actual expenses the first year of service, it has to remain actual expenses for the life of the vehicle. If you take mileage the first year; you have a choice every year after. I keep track of each and use the method that gives me the most advantage.


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## HarryVanderpool (Apr 11, 2005)

My accountant tells me that I am audit proof.
Doesn't mean that I will never be audited, just means that the auditor will walk out empty handed.
DOCUMENTATION.
Documentation, some knowledge of the rules and honesty will serve you well.

About 12 years ago I put a mileage log in each truck.
Even in our 3 pickup trucks there is a mileage log.
Every time the truck is driven ,the driver writes name, date, ending date, starting mileage, ending mileage and "comments". In the comments, you write a short phrase about the reason for the trip.

The mileage in those truck logs is consecutive, without one single missing mile.
All of our fuel receipts come in with the vehicle or machine that was filled and this is entered in Quickbooks.
All maintenance, insurance, licensing, truck supply's, etc are also entered in Quickbooks, per vehicle. 

Then, like Hartz said, I let my accountant decide the best deduction based on actual expenses each year.

As a side note: I did not anticipate how valuable the truck logs would be in terms of historical data.
I often get phone calls from friends asking something like, "When do you normally move bees into meadowfoam"?
I can open up a mileage log and tell them year by year of when I did what for the last 12 years.
Very cool!


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## sqkcrk (Dec 10, 2005)

Is something like that necessary when a vehicle is never used for personal use?


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## Barry Digman (May 21, 2003)

sqkcrk said:


> Thanks, Michael. I think I need a different Accountant.


If your beancounter has been doing you tax returns for several years he or she should be answering the question for you and telling you why they're using one method or another. They should also be telling you exactly how you should be keeping track of things that you're going to turn over to them when it's time to prepare your taxes.


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## sqkcrk (Dec 10, 2005)

I guess I need to ask them the right questions.


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## Barry Digman (May 21, 2003)

Let me rephrase it Mark. A good CPA knows your business and answers your questions before you ask them. He's the one who interviews you to gather everything he needs to serve you, rather than simply responding to your questions.


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## sqkcrk (Dec 10, 2005)

:thumbsup:


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## HarryVanderpool (Apr 11, 2005)

sqkcrk said:


> Is something like that necessary when a vehicle is never used for personal use?


How would anyone know the utilization other than you without documentation?
What do you have for proof?
In another example; why keep receipts for business expenses?
Can't you just tell the auditor, "Oh no, all of the money spent was legitimate business expense".
Then the auditor replies, "O.K. because you said it, I believe you". as he walks past the new Harley in your garage....
Doesn't work that way.


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## sqkcrk (Dec 10, 2005)

I see what you mean. The Log w/out the receipts could be suspect too though, right? I keep a log of each fill up. Noting the date, place, odometer reading, miles driven since last fill up, cost of fuel, and gallons purchased. So I guess I do something similar to what you do. Now I have to keep all the receipts. I hate those receipts that smudge and loose ink over time.

You've given me something to think about now. Thanks.


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## Rader Sidetrack (Nov 30, 2011)

Mark, you could _scan_ those receipts into a file before they get smudged/faded with a portable scanner. For instance, one like this ....

http://www.amazon.com/Fujitsu-SCANS..._cp_229_1?ie=UTF8&refRID=0XRX03R1749FB5GY4A5J

In addition to creating a PDF of the receipt, it also claims to extract data from those receipts to a CSV file for interchange with other programs.

This is not my recommendation of a particular system, just a description of one option.


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## Barry (Dec 28, 1999)

Since I take actual costs on my truck for tax purposes, I don't keep a mileage log. I understand what Harry is saying, but there comes a point where enough is enough. I keep all receipts pertaining to the truck, fuel and repairs. I have QB and it keeps a record of all monies coming in and going out. This is my record supporting the use of the truck.


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## Barry (Dec 28, 1999)

Rader Sidetrack said:


> Mark, you could _scan_ those receipts into a file before they get smudged/faded


Just use a credit card for all purchases. You'll have a backup record of everything.


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## jim lyon (Feb 19, 2006)

I use actual expenses and take them off of cc receipts. Each employee has a business credit card and the Amex business card I use collates them by user name so it serves the dual purpose of being a diary of sorts. I also take yearly odometer readings for each truck, partly out of curiosity and partly because I feel it would be good backup info to have in case of an audit. I've never had an audit but if I did I'm not sure I would be gracious enough to let an IRS guy park his new Harley in my garage. .


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## Barry (Dec 28, 1999)

sqkcrk said:


> I see what you mean. The Log w/out the receipts could be suspect too though, right?


Isn't _everything_ suspect with the IRS? Just be honest in your business and take reasonable steps to document it. Like everything else in life, you have to weigh all the risks and find a spot that fits your lifestyle and personality.


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## Rader Sidetrack (Nov 30, 2011)

Barry said:


> Just use a credit card for all purchases. You'll have a backup record of everything.


I don't quite see how that works for identifying vehicle expenses.

If you go to a "gas station" and _only_ purchase fuel, then your credit card transaction reflects a vehicle expense. But if you also purchase some alleged "food" or beverages at that gas station on that transaction, does your credit card company separate out the non vehicle expenses?"


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## jim lyon (Feb 19, 2006)

Rader Sidetrack said:


> I don't quite see how that works for identifying vehicle expenses.
> 
> If you go to a "gas station" and _only_ purchase fuel, then your credit card transaction reflects a vehicle expense. But if you also purchase some alleged "food" or beverages at that gas station on that transaction, does your credit card company separate out the non vehicle expenses?"


I keep receipts as well, if something is questioned I could probably dig it out. Isn't a cup of coffee also a necessity in running a truck?


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## Barry (Dec 28, 1999)

I doubt it. Like I said, be honest in your business. I pay cash or use my personal cc for non business items. If I do happen to use my business cc for personal expenses, I simply enter that transaction in QB as a distribution.


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## Barry (Dec 28, 1999)

Rader Sidetrack said:


> But if you also purchase some alleged "food" or beverages at that gas station on that transaction


As long as I discuss work issues while drinking that beverage or eating that food, I can deduct it as well. :banana:


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## Barry (Dec 28, 1999)

jim lyon said:


> Isn't a cup of coffee also a necessity in running a truck?


Absolutely! It also helps in overall work performance.


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## snl (Nov 20, 2009)

Barry said:


> As long as I discuss work issues while drinking that beverage or eating that food, I can deduct it as well.


True, but only if you document the discussion!


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## Ian (Jan 16, 2003)

Barry said:


> Since I take actual costs on my truck for tax purposes, I don't keep a mileage log. I understand what Harry is saying, but there comes a point where enough is enough. I keep all receipts pertaining to the truck, fuel and repairs. I have QB and it keeps a record of all monies coming in and going out. This is my record supporting the use of the truck.


:thumbsup:

Up here... Yearly depreciation and all costs associated. We only claim mileage when using personal vehicles for business use. $.0.45 cents per km. 

It's probably different in the US, I've never heard of claiming miles on your company truck before...? Kinda like taking things twice


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## snl (Nov 20, 2009)

Barry said:


> I don't keep a mileage log.


You should. I've seen the IRS deny expenses to tow truck operators because they did not keep a log. They said the tow truck could have been used for personal reasons. 
The IRS has to prove income during an audit, the person being audited must substantiate expenses..............


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## Barry (Dec 28, 1999)

I don't have OCD so the receipt is my document. You shouldn't drive over the speed limit either!!


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## snl (Nov 20, 2009)

Ian said:


> It's probably different in the US, I've never heard of claiming miles on your company truck before...? Kinda like taking things twice


Ian, in the US, there are two ways of claiming deductions for the business use of vehicles . Actual expenditures OR business mileage. If you use business mileage, you can deduct I believe it's 57.5 per mile in 2015.


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## snl (Nov 20, 2009)

Barry said:


> I don't have OCD so the receipt is my document. You shouldn't drive over the speed limit either!!


As you've said before....
Isn't _everything suspect with the IRS? Just be honest in your business and take reasonable steps to document it. Like everything else in life, you have to weigh all the risks and find a spot that fits your lifestyle and personality.
_
AND HOPE the IRS agrees with you.........


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## sqkcrk (Dec 10, 2005)

Rader Sidetrack said:


> Mark, you could _scan_ those receipts into a file before they get smudged/faded with a portable scanner. For instance, one like this ....
> 
> http://www.amazon.com/Fujitsu-SCANS..._cp_229_1?ie=UTF8&refRID=0XRX03R1749FB5GY4A5J
> 
> ...


Are credit card statements not proof enough? What does one have to prove? That the fuel was purchased? Or what it was purchased for?


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## sqkcrk (Dec 10, 2005)

Barry said:


> Isn't _everything_ suspect with the IRS? Just be honest in your business and take reasonable steps to document it. Like everything else in life, you have to weigh all the risks and find a spot that fits your lifestyle and personality.


Pretty much what I do. I write receipts for every honey sale or pollination and every expense gets tossed into a monthly file to be collated into all the different expense category every January.

So far, so good.


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## sqkcrk (Dec 10, 2005)

Barry said:


> As long as I discuss work issues while drinking that beverage or eating that food, I can deduct it as well. :banana:


And as long as I stop at Kelly Co and Mann Lake on the way out to CA next May on my way to visit some almond groves for the potential future pollination work and then to buy some protein patties from Keith, and then take a day out of my business trip to attend my daughter's wedding, and hit a couple beekeeper meetings and give a talk or two. Well, that might be stretching things a little.


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## sqkcrk (Dec 10, 2005)

Ian said:


> :thumbsup:
> 
> Kinda like taking things twice


No, Ian. If you claim mileage on a company vehicle you can't claim all of the other expenses. One either deducts by the total annual mileage or by all expenses including depreciation.


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## HarryVanderpool (Apr 11, 2005)

Barry said:


> I keep all receipts pertaining to the truck, fuel and repairs. I have QB and it keeps a record of all monies coming in and going out. This is my record supporting the use of the truck.


Actually not.
Those receipts could reflect 100% personal use, 100% business use or anything in between.
Receipts are only 1/2 of the equation. They reflect expense.
In an audit, how will you demonstrate utilization?


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## Ian (Jan 16, 2003)

sqkcrk said:


> No, Ian. If you claim mileage on a company vehicle you can't claim all of the other expenses. One either deducts by the total annual mileage or by all expenses including depreciation.


I see
Good way to make a lot of paper work lol


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## sqkcrk (Dec 10, 2005)

Not really.


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## The Honey Householder (Nov 14, 2008)

I buy new trucks but only every 10-15 years. So milage is the why I go. 
My wife's company car is a prius and at 45 miles to the gallon it only makes since to go by the mile.


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## Ian (Jan 16, 2003)

sqkcrk said:


> Not really.


The way we make mileage claims is recording every trip made, in a log book and submitted. It' can be daily thing, multiple trips. I understand perhaps using it for long haul where the mileage racks up and depreciates


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## The Honey Householder (Nov 14, 2008)

2015 57.5 cent per mile/ 12,000 miles $6900
2016 54 cent per mile/ 12,000 miles $6480 

It all comes down to how long you keep trucks and miles per year.


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## sqkcrk (Dec 10, 2005)

Ian said:


> The way we make mileage claims is recording every trip made, in a log book and submitted. It' can be daily thing, multiple trips. I understand perhaps using it for long haul where the mileage racks up and depreciates


Well, maybe I'm lucky I haven't been audited yet, but what I do is record the odometer reading each Dec. 31 and subtract the previous year's reading and multiply by the per mile claim allowance. How much more simple can it be?


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## Barry (Dec 28, 1999)

The Honey Householder said:


> My wife's company car is a prius


I'm so sorry!


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## Barry (Dec 28, 1999)

HarryVanderpool said:


> Actually not.
> Those receipts could reflect 100% personal use, 100% business use or anything in between.
> Receipts are only 1/2 of the equation. They reflect expense.
> In an audit, how will you demonstrate utilization?


And one can't make mileage logs say whatever they want them to say? It still comes down to your word. If one wants to cheat the IRS, there are many ways to do it. I demonstrate utilization by recording all my job receipts and income I receive from clients. How else can I remodel a kitchen without many trips for supplies, to and from the job site, etc. I suppose if I only showed $5,000 in income for the year and put 30,000 miles on my truck that would be a red flag. I put 7,000 miles on my truck per year.


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## snl (Nov 20, 2009)

Barry said:


> And one can't make mileage logs say whatever they want them to say?


Very true, but without them the IRS can disallow the expenses as you are REQUIRED to have evidence (log). Demonstrating job receipts and income may or may not be evidence of business use of a truck. (Depends on the mood of the auditor.) The IRS auditor is usually not happy with that evidence as THEY are required to keep logs.


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## Ian (Jan 16, 2003)

sqkcrk said:


> Well, maybe I'm lucky I haven't been audited yet, but what I do is record the odometer reading each Dec. 31 and subtract the previous year's reading and multiply by the per mile claim allowance. How much more simple can it be?


Ya that's simple, and way less paper work, 
And if it works to your advantage at the end of the year, perfect. 👍 

I'm equating this in my head how it would relate to my operation. difference being we are in different countries but logistics still apply. 
It would be nightmare of paper work. We run nearly a fleet under one Corporate name. All maintenance, all operating costs billed to our Corp. Because if the corp does not bank roll it... But I guess it would , just while we are doing the books, we need to remember not to expense it, which runs us into tax re embursment confusion because it's not an expense actually claimed on but an expense claimed another way. 

That's all I mean about more paper work aside from regular entries, 2 sets of books, I mean a fleet of books .,?


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## HarryVanderpool (Apr 11, 2005)

Barry said:


> And one can't make mileage logs say whatever they want them to say? It still comes down to your word.


Close.

It comes down to your word _based on organized documentation._

This is the basis of most successful business legalities, including accounting, tax, safety programs (MSDS, Lock-out / Tag-out, DOT compliance etc....
Weather it is OSHA, Dot, IRS, FDA, WHOMEVER; Documentation is the answer.
Your word means NOTHING without it.


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