Car Expenses

by in Newsletter on Apr. 2, 2012

To take a business deduction for the use of your car, you must determine what percentage of the vehicle was used for business. No deduction is allowed for strictly personal use, such as commuting.

Deductible car expenses can include the cost of 1) traveling from one workplace to another, 2) making business trips to visit customers or attending business meetings away from your regular workplace, and 3) traveling to temporary workplaces.

It is important to keep complete records to substantiate items reported on a tax return in the case of car and truck expenses, the types of records required depend on whether you claim the standard mileage rate or actual expenses.

For actual expenses, add your annual car operating expenses, including gas, oil, tires, repairs, license fees, lease payments, registration fees, garage rental, insurance and depreciation. Multiply the car operating expenses by the percentage of business usage to arrive at your deductible expense. Business related parking and road tolls are fully deductible expenses that do not have to be reduced by the percentage of business usage.