Mileage Deduction as Unreimbursed Employee Business Expense
Okay I got a new case for appeal consideration and am blasting out my thoughts as to why this one is not receiving further consideration. In short it is not winnable. You need to be very diligent in your research and documentation to successfully deduct business miles as unreimbursed employee business expense on IRS Form 1040 Schedule A.
The deduction is allowed and indeed one of the most common expenses incurred by taxpayers who use their personal vehicle for their employer’s business. In order to be deductible though taxpayers must be able to substantiate the mileage and explain the circumstances for which an ordinary and necessary deduction would be allowed.
In this particular case the mileage claimed by the taxpayer was properly recorded in a log with sufﬁcient information to determine the mileage claimed and the trip purpose. However the IRS still denied the mileage deduction because the taxpayer did not establish that the business expenses paid or incurred were ordinary and necessary for the taxpayer’s employment.
Even though the taxpayer’s employer did not reimburse the tax payer for the miles incurred while on the job and reported on the schedule A, the IRS still concluded that there was insufﬁcient evidence that the expenses were ordinary and reasonable because the employer maintained a ﬂeet of vehicles that employees were expected to use when traveling. Furthermore the employer had a policy in place to reimburse employees for business use of their personal vehicles if the use is approved in advance.
So I think the lesson learned here is that if your employer has a fleet of vehicles for employee’s travel, use the employer’s vehicle. Or if the employer reimburses employees for miles driven on the job then accept the reimbursement.
John R. Dundon, EA [720-234-1177, John@JohnRDundon.com]
Enrolled with the United States Department of Treasury to Practice before the IRS (Enrolled Agent # 85353). Under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent. A Federally Authorized Tax Practitioner (USC 31 Section 330 + IRC 7525a.3.A) regulated under US Treasury Cir. 230.