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Kiplinger: IRS Audit Red Flags

Claiming 100% Business Use of a Vehicle

Another area ripe for IRS review is use of a business vehicle. When you depreciate a car, you have to list on Form 4562 what percentage of its use during the year was for business. Claiming 100% business use of an automobile is red meat for IRS agents. They know that it's extremely rare for an individual to actually use a vehicle 100% of the time for business, especially if no other vehicle is available for personal use. IRS agents are trained to focus on this issue and will scrutinize your records. Make sure you keep detailed mileage logs and precise calendar entries for the purpose of every road trip. Sloppy recordkeeping makes it easy for the revenue agent to disallow your deduction. As a reminder, if you use the IRS' standard mileage rate, you can't also claim actual expenses for maintenance, insurance and other out-of-pocket costs. The IRS has seen such shenanigans and is on the lookout for more.

(iStock)

More From Kiplinger:
The 19 Most-Overlooked Tax Deductions
QUIZ: Is It Deductible?
14 Extraordinary Tax Deductions



The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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