The IRS requires that you have adequate records backing up your mileage deduction. If you’re audited, the IRS examiner will ask to see your records or log.
If you don’t have exact, reliable records, the IRS will ordinarily disallow your entire mileage deduction. This is true even if it’s clear that you did in fact drive for your ministry during the year.
The Cohan rule allows the IRS to estimate an expense when a taxpayer lacks adequate records. This does not apply to automobile expenses. Thus, you can’t rely on estimates of your mileage. You also can’t use records you create out of thin air after learning you’re facing an audit.
Rather, you should keep contemporaneous records of your ministry mileage. “Contemporaneous” means your records are created each day you have ministry miles, or soon thereafter—at least weekly. If you lack such records, you’ll be forced to attempt to prove your mileage based on your oral testimony and whatever documentation you can provide, such as receipts, emails, and other evidence of your miles.
For all your ministry-related miles, you should have a record of the:
- time and date
- total distance
- destination – Although not strictly required, it’s wise to record the start and stop location for more thorough records
- ministry purpose
The IRS also wants to know the total number of miles you drove during the year for ministry, commuting, and other personal driving. So, you definitely should not estimate a mileage deduction and rely on any IRS’ leeway.
MileIQ – Mileage Tracking
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (763) 425-8778
Fax: (888) 876-5101