The IRS requires you to keep track for mileage regardless of which method you use. You will need to enter your mileage even for actual expenses. The IRS need to determine how much of your car use was business use vs personal. The way they do that is to compare business miles to total miles. Keep in mind the following when deciding which method to choose.
Business and personal use. If you use your
car for both business and personal purposes,
you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.
What Are Adequate
Records?
You should keep the proof you need in an account book, diary, log, statement of expense,
trip sheets, or similar record. You should also
keep documentary evidence that, together with
your record, will support each element of an expense.
Documentary evidence. You generally must
have documentary evidence, such as receipts,
canceled checks, or bills, to support your expenses. https://www.irs.gov/pub/irs-pdf/p463.pdf
- Choosing the
standard mileage rate. If you want to use the standard mileage rate for
a car you own, you must choose to use it in the first year the car is
available for use in your business. Then, in later years, you can choose
to use either the standard mileage rate or actual expenses.
- If you use
actual car expenses to
figure your deduction for a car you
own and
use in your business, you can claim a depreciation deduction. This means
you can deduct a certain amount each year as a recovery of your cost or
other basis in your car.
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