What Happens If a Realtor Gets Audited on Mileage?
If your mileage is ever questioned, the auditor asks for one thing: your log. If it's complete — date, destination, business purpose, miles, recorded fresh through the year — the conversation is short and professional. If it doesn't exist, that's when things get uncomfortable. This article is about making sure you're in the first group.
No horror stories here, and no scare tactics. Most mileage questions arrive as correspondence — a letter asking for documentation — not as agents at your door. The process is methodical, not dramatic: they ask, you provide, they decide. What decides it, more than anything else, is whether your records answer their questions before they're asked.
What the auditor actually asks for
The request is straightforward: your mileage log for the year in question, showing the date, destination, business purpose, and miles for each business trip. The IRS's business-use-of-car guidance (Topic 510) is explicit that the law requires you to substantiate expenses with adequate records. They may also ask for corroboration — your appointment calendar, showing records, and odometer readings from the start and end of the year. They're not looking for perfection; they're looking for a record that was clearly kept in real time and tells a consistent story.
What they're really testing is credibility. A log with specific destinations, varied mileages, and business purposes that match your calendar reads as real life. A log of suspiciously round numbers, identical trips, or entries that contradict your own records reads as fiction. The bar isn't high — it's just honest.
Your log is your defense
Think of the mileage log the way you'd think of a witness: the one who was there, taking notes, wins. Every entry with a date, a real address, a specific purpose ("buyer showing — Nguyen family, second tour"), and the miles is a small piece of testimony. Hundreds of them, kept daily, are overwhelming evidence that you drove those miles for business.
This is why keeping the log correctly matters more than any deduction strategy. Strategies are arguable; a contemporaneous log is a fact. If you take one thing from this article: the log doesn't just support your deduction, it is your deduction's defense.
Where agents get in trouble
The patterns that cause problems are depressingly consistent. No log at all — just a number on the return and a shrug. A log built in April from memory, with round numbers and no corroboration. Personal miles mixed in — the daily commute quietly counted as business, which poisons the credibility of the legitimate entries around it. And inflated numbers — rounding every trip up "a little," which adds up to a lot and is easy to spot against mapping distances.
Notice what these have in common: none of them is about the tax law being complicated. They're all about record-keeping being neglected. The agents who sail through aren't tax experts — they're just the ones who wrote things down.
The calm, boring habits
Audit-proofing your mileage is aggressively unglamorous. Log every business trip the day it happens: date, destination, purpose, miles. Photograph your odometer every January 1st. Keep toll and parking receipts separate. Don't round — write the actual miles. Don't mix in the commute. Review the log monthly for gaps while you can still remember. That's it. There is no advanced technique beyond doing the simple thing every time.
Boring is the point. An auditor opening a boring, complete, consistent log has nothing to dig into — and a file with nothing to dig into gets closed. Excitement, in audits, is what you're avoiding. Keep the logs after filing, too: the IRS's recordkeeping guidance explains that how long you must keep a document depends on what it records — storage is cheap, and the lookback isn't always short.
If you get the letter
Don't panic, and don't ignore it. Call your CPA immediately — ideally, let them handle all communication from the start. Gather what the letter asks for and nothing more: your log, your calendar, your supporting records. Respond by the deadline stated. Don't volunteer extra years, extra documents, or creative explanations. And whatever you do, don't manufacture records after receiving the letter — that turns a documentation question into something far worse. Your CPA has done this before; let them lead.
Real agent questions
How likely am I to be audited on mileage?
No honest article can give you odds, and you should distrust any that does. What matters isn't the probability — it's that mileage is one of the most commonly questioned items because so many agents keep poor records. A complete log makes you ready regardless of the odds.
What exactly does the auditor want to see?
Your mileage log first: date, destination, business purpose, and miles per trip, recorded at or near the time. They may also ask for supporting evidence — your calendar, showing records, and start/end-of-year odometer readings. The log is the main event; everything else corroborates it.
What if my mileage log has gaps?
Be honest about them. Gaps you acknowledge and explain are far less damaging than entries you invent to fill them — a fabricated log, if discovered, undermines everything else you submitted. Reconstruct what you can support with your calendar and records, mark it as reconstructed, and let your CPA advise on the rest.
Can I recreate a mileage log from my calendar and GPS history?
You can, and it's better than nothing — calendar appointments, emails, and location history can substantiate where you were and why. But a reconstructed log carries less weight than one kept contemporaneously, so label it honestly as reconstructed. Then start a real daily log immediately so you never have to do this again.
Should I bring my CPA to the audit?
Yes — and ideally, let your CPA handle the communication from the start. They know what the auditor needs, what to provide, and just as importantly what not to volunteer. Responding through your CPA keeps the process professional and contained. Don't go it alone to save money.
How many years back can they look at my mileage?
Under current IRS guidance the lookback is generally three years, though it can be longer in certain situations. That's another reason to keep logs permanently rather than tossing them after filing — storage is cheap and the lookback isn't always short. Confirm the current rules with your CPA.
Sources
- IRS Topic No. 510 — Business Use of Car (recordkeeping requirements, substantiation by adequate records)
- IRS Recordkeeping for Small Businesses (how long to keep records, burden of proof)
This article is educational and does not constitute tax advice. If you receive any notice from a tax authority, contact your CPA before responding.
The best time to build your defense was January. The second-best time is today. Get the app and start a mileage log that keeps itself.
For the full picture of what a proper log contains, see What Does the IRS Require in a Mileage Log? — and for handing it all over cleanly, What to Include in Your CPA Handoff.
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