| You can choose between two methods for deducting business-related expenses
of a car:
- Actual Expense
- Standard Mileage Allowance for 2010 is 50¢/mi.
The standard mileage rate for 2009 was 55¢/mi.
- You must make the decision in the first year you own the car or place
the car in service for business.
- If you choose to use the Actual Expense method in the first year,
you can not use the standard mileage expense in later years.
The Actual Expense method allows you to deduct all of your out-of-pocket
costs for operating your car for business, plus an allowance for depreciation
if you own your car.
Actual expenses include:
| Depreciation |
Licenses |
Tolls |
| Garage Rent |
Oil |
Towing |
| Gas |
Parking Fees |
Lease Fees |
| Insurance |
Repairs |
Tires |
If you are self-employed, the interest on your car loan is also deductible
if used more than 50% for business, if you elect to use actual expenses.
The Standard Mileage Allowance also includes deductions for:
| Parking Fees |
Towing |
Tolls |
It is VERY important that you record the number of miles
driven for business, the date of each trip, the designation
for the travel, and the reason. You must also keep track of
the total number of miles driven each year. Feel free to use
our mileage
record form (.pdf 39KB) for your tracking purposes.
For tax purposes, if you operate as a sole proprietor, Car
Expenses for the business are recorded on Schedule C of the
IRS tax forms and the mileage breakdown is recorded on IRS
Form 2106.
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