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.
