Turbo tax is making me enter mileage for my car but I didn't keep records.

[CG2]

I'm trying to deduct my car as a business expense but I didn't keep a record of my mileage. Turbo tax is insisting I enter in numbers even though I don't have any. What should I do? 

Thanks

[xmasbaby0]

Are you self-employed?   You are not posting from online Self-Employed -- we cannot tell what software you are using.  Only someone who was working as an independent contractor would need to enter mileage for a Schedule C--for business expenses.   If you are a W-2 employee you cannot get a federal deduction for mileage driven for work.  What are you trying to do?

[CG2]

Yes, I'm self-employed. I didn't realize there was a separate forum for that.

Appreciate any help!

[xmasbaby0]

Your other thread

https://ttlc.intuit.com/community/business-taxes/discussion/re-do-i-have-to-deduct-business-expenses...

[Mike9241]

from IRS PUB 463 page 24

Recordkeeping
If you deduct travel, gift, or transportation expenses,
you must be able to prove (substantiate)
certain elements of expense. This chapter
discusses the records you need to keep to
prove these expenses.

You can’t deduct amounts that you approximate
or estimate

if you were to ignore this rule and enter an estimate, then you would have to answer that you don't have written records. this could be a red flag for the IRS and your audit potential would be increased. if audited the IRS could (and should) disallow all these expenses and then assert additional taxes, penalties, and interest.

[rjs]

@CG2 

I'm responding to several statements you made in both of the threads that you started.

"Yes, I'm self-employed. I didn't realize there was a separate forum for that."

It's not a separate forum, but when you posted your questions you were asked to indicate what TurboTax product you are using. You didn't do that. xmasbaby0 was looking for the product indicator as a clue to whether you are self-employed. You did not initially say that you are self-employed in either of your two questions. If you had indicated that you were using TurboTax Self-Employed or TurboTax Home & Business that would have been a clue.

"I'm trying to deduct my car as a business expense but I didn't keep a record of my mileage."

Obviously in order to deduct expenses you have to have records of the expenses. There are two ways to deduct vehicle expenses, the standard mileage rate or actual expenses. In order to use the standard mileage rate you obviously have to have a record of your mileage. To use actual expenses you have to have records of all your car expenses: gas, maintenance, repairs, insurance, etc. And if the car is not used exclusively for business, you also need a log of business vs. personal mileage so that you can determine the percentage of business use.

"I'm not new to [self-employment]. However the laws do keep changing"

The laws about deducting business expenses, including car expenses, haven't changed significantly in years. If you're not new to self-employment, how have you deducted your expenses in previous years?

"my refund goes down with the amount of business expenses I enter"

That suggests that you are getting a credit that is affected by the amount of your income, such as the Earned Income Credit. Lower income, because of additional expenses, can reduce the amount of the credit that you are entitled to. That makes it even more important to report all your expenses accurately.

You should probably go to a local tax professional for help straightening out your tax return. The tax pro can also advise you about proper record keeping for your business.

As you can see, when information about one tax situation is scattered in multiple threads it's confusing and hard to follow, and hard to see the whole picture. If you have any further questions, please pick one of your two threads to continue the discussion, and post only to that one thread.

[CG2]

Thanks @Mike9241 . I wasn't going to deduct the car at all because I didn't keep mileage records and because it didn't seem to be helping my taxes anyway. But since I was told I HAVE to deduct my expenses or I'm committing fraud, I went back to put it in. I clicked the "I do not have records" button and was directed to the same page as always where you have to input the mileage. The only way I could get around not estimating something, which I know you can't do, was to input "0" for the mileage. Since I do have work miles, am I committing fraud in this case for not reporting expenses? I feel damned if I do, and damned if I don't! Perhaps it's a turbotax glitch that it won't let me bypass this step? 

[CG2]

Thanks, @rjs . I will go put myself in time out. 😜

[Mike9241]

you are supposed to report business expenses only if they are deductible.   there is no fraud or tax evasion for not reporting non-deductible expenses (since the IRS would just disallow them upon audit).  otherwise, many filers would be guilty.  

if this is the first year for reporting the vehicle, I would just delete all the entries for the vehicle. 

if you want to be able to deduct vehicle expenses next year record your total mileage now and then again at the end or near the end of 2023. 

there are free cell phone apps that will allow you to track mileage or use paper and pencil. you don't have to track personal or commuting mileage.  

The IRS requires a few basic components in a Mileage Log:

Date
Destination
Business purpose
Odometer reading
Other expenses (gas, oil, tolls, etc)

[rjs]

To clarify what Mike9241 said about tracking mileage for 2023: You have to have a record of your business mileage. If you use the car for both business and personal use, just having the odometer readings at the beginning and end of the year isn't good enough. You have to keep a log of your business mileage during the year, which essentially means keeping a record of every trip.

You haven't said what the nature of your business is. Keep in mind that trips in either direction between home and a work location are commuting, not business mileage, and are not deductible.

[Opus 17 · Accepted solution]

All of your business expense deductions must be supported by reliable records.

If this is a vehicle used 100% for the business, you don’t need a mileage log of business miles because it is assumed that all of the miles driven or for the business. You also don’t have to use the standard mileage method, you can use the actual expense method and you would deduct 100% of your actual expenses for fuel, maintenance, repairs, insurance, and depreciation. However, you must have accurate and reliable records of those expenses.

if this is your personal vehicle that is used partly for business, then you need reliable records of the mileage that you drive for business purposes. You can deduct either your actual expenses or use the standard mileage rate. 

All the rules for deducting vehicle expenses are listed in publication 463 chapter 4.

https://www.irs.gov/forms-pubs/about-publication-463

regarding expense deductions, it is generally true that you are required to deduct all of your legitimate and reasonable business expenses. Especially because there are a couple of kinds of tax fraud that can be committed by not deducting expenses. For example, you won’t qualify for earned income credit if your business has a loss, but if you omit some of your expenses to show a profit, you might qualify for earned income credit that would be larger than the amount of tax you would have to pay.  Or, if you omit some of your expenses to show a larger profit in order to qualify for a larger mortgagor business loan, that might be considered bank fraud.

However, you can’t deduct expenses if you don’t have reliable records.

That raises an interesting legal question: can someone be held legally responsible for not declaring expenses if the reason they didn’t declare expenses is that they failed to keep records?  Is there a difference between someone who accidentally fails to keep records and someone who deliberately fails to keep records because they don’t want their expenses to be discovered?

I am not an attorney, and I don’t have the facilities to research these questions, but it seems to me that the safest way to avoid this kind of problem in the future is to keep accurate records.

In any case, if you don’t have reliable accurate records of your vehicle use and expense, you can’t include it on your tax return. You may need to go back and delete the vehicle or enter zeros for the amount of mileage and the amount of the expenses.  If there are consequences in the future for not keeping accurate records, you will have to deal with them in the future.

[CG2]

@Opus 17 , Good thoughts, thank you. In the past, I have always kept records of my mileage. However, last year I was dealing with lack of sleep from a new baby. When you're piling the kids in the car at 7am just so one of them can go to the good school (which is a second mortgage on it's own) 45 minutes away and you've had about 3 hours of sleep the night before, things fall by the wayside. I mostly forgot.  I didn't figure it was that big a deal since my business is so small but I see the error there. I've started logging again this year. I'll just have to do the best I can for last year.

[DianeW777]

It's important to note that if you have a reliable method to create your mileage logs such as a business calendar that shows your trips and meetings for business, as well as the business purpose, in 2022, you can create your written records for 2022.  

As written by several experts in this conversation, in the event that you have no way to substantiate the business mileage and use, and you do not know where and when your business trips or meetings took place then there is nothing to deduct for 2022. 

@CG2