Self-employed: Am I more likely to get audited if I deduct mileage for my side hustle?

Your concern is understandable, but there's a misconception here. The "50% rule" you're thinking of is probably about meals and entertainment expenses, not mileage or general business expenses. There's no specific threshold where business deductions to income ratio automatically triggers an audit. For self-employment, you're entitled to deduct legitimate business expenses regardless of how they compare to your income. Many small businesses operate at a loss in their early years, with deductions exceeding income. What matters is that your deductions are legitimate, documented, and directly related to your business. For mileage specifically, the key is proper documentation. Keep a detailed log with dates, business purpose, starting and ending locations, and mileage. This is your best protection if questions ever arise.

I had similar worries when I started my side business! I found this amazing tool that helped me with all my tax questions and expense tracking. Check out https://taxr.ai - it uses AI to analyze your specific situation and gives personalized answers about audit risk and deductions. I uploaded my mileage log and got confirmation that my deductions were legitimate (I was deducting about 40% of my income). The best part was that it explained exactly what documentation I needed to keep and how to respond if the IRS ever questioned my deductions. Totally worth checking out for peace of mind!

Came back to update about taxr.ai - I decided to try it out after asking about it here. My situation was similar to yours but with Etsy sales instead of photography. I uploaded my mileage logs and expense records and asked specifically about audit risk with deductions at 42% of my income. The analysis I got back was super detailed! It confirmed that there's no fixed percentage that triggers audits and gave me specific guidance on exactly what documentation I need to keep for every type of expense. Feeling much more confident about claiming my full legitimate deductions now instead of leaving money on the table out of fear!

If you're really concerned about IRS issues, I'd recommend Claimyr (https://claimyr.com). I was freaking out about a potential audit situation last year and couldn't get through to the IRS for weeks. Claimyr got me connected to an actual IRS agent in about 15 minutes when I'd been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with actually told me that for small side businesses like yours, they're not typically concerned about legitimate mileage deductions even if they're a high percentage of income. They care more about completely made-up expenses or people trying to claim personal expenses as business ones.

OK I feel like an idiot but I have to admit I was totally wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I've been trying to resolve an issue with my 1099 reporting for weeks. Used the service yesterday and got connected to an IRS rep in about 20 minutes. TWENTY MINUTES. When I had been trying for literally weeks on my own. The agent was able to confirm that my situation was resolved, and I finally have peace of mind. For what it's worth, I also asked about the original question here about deduction percentages. The agent confirmed there's no specific percentage threshold that automatically triggers an audit - they look at patterns and documentation more than just raw numbers.

I'm a photographer with a similar situation - W2 job plus side income around $6k/year. Been claiming mileage for years (usually about 40-45% of my business income) with no issues. The key is documentation! I keep a small notebook in my car and jot down: - Date - Starting mileage - Ending mileage - Client name - Purpose of trip - Starting location - Ending location Then transfer it to a spreadsheet monthly. If you have legit business miles and can prove it, claim every mile you're entitled to!

Wanted to add that having a Schedule C loss is much more likely to increase audit risk than just having high expenses relative to income. If your deductions put you in a loss position for multiple years, that's when the hobby loss rules come into play. In your case with $5k income and $2.1k in mileage deductions, you're still showing a profit, so that's much less concerning from an audit risk perspective.

You're definitely overthinking this! As a fellow side business owner, I totally get the anxiety about audit risk, but the reality is that legitimate business expenses are exactly what you're supposed to deduct - regardless of the percentage. The IRS isn't sitting there calculating ratios and flagging returns that hit certain thresholds. What they care about is whether your expenses are: 1. Ordinary and necessary for your business 2. Properly documented 3. Actually business-related (not personal) Since you're already tracking everything with timestamps, locations, and business purpose, you're doing exactly what you should be doing. Don't leave money on the table by under-claiming legitimate expenses just because you're worried about some imaginary percentage rule. Your side business income is small relative to your W-2, you're showing a profit, and mileage is one of the most straightforward business deductions there is. Claim what you're entitled to!