Saturday, January 2, 2010

Happy New Year! Now, go write down your odometer reading

It's the beginning of a new year, and it's time to document the odometer reading of each vehicle you use in your business.

Why? Establishing total yearly mileage for the vehicle is an essential part of documenting a deduction for the business use of a vehicle. In order to claim a deduction for vehicle expenses, you must know the percentage of business use each vehicle you use in your business, not just the number of miles of use. And the IRS is picky about what you must do to prove your deduction.

Simply knowing the number of miles you use the vehicle for business use is not enough; you must know your TOTAL mileage to calculate the business-use percentage.

Hopefully, you wrote down the beginning of 2009 odometer reading(s) somewhere; if so, with that number and the reading you take today, we will be able to calculate your total vehicle mileage for 2009 and, then, the business-use percentage.

If you did, congratulations!

If not, it's time for New Year resolution: write down the beginning odometer reading of my vehicle(s) so I'll be able to properly document the business use for 2010!

Since I'm writing from Florida, it's easy for me to say, "Go outside right now and check your vehicle mileage." However, I realize for many of you in other parts of the country, that process may involve many layers of clothes and possibly scrapping ice. I shutter at the thought. Nevertheless, you must know your beginning of the year odometer reading to properly document your tax deduction.

If you're not sure where to store that information, you can email it to me @ and I'll store it for you.

(Please also see the post from December 2009 for more about maintaining a log of vehicle mileage. Jump to the post by expanding the 2009 diamond to the right, clicking on the December diamond, and selecting the post.)

Happiest of New Years and best wishes for the coming decade.