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What Car/Truck Expenses are Deductible for a Business?

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Question: What Car/Truck Expenses are Deductible for a Business?
Answer:

Recording Expenses for Business Use of Car/Truck
If you travel by car for business purposes, you may deduct your business use of the vehicle. There are two methods of calculating your deduction; which one you take depends on your tax situation.

Actual Expenses
You may record and take as a deduction all expenses for use of your car/truck for business purposes. If you use the same vehicle for personal and business purposes, you may deduct only the business percentage of use. Expenses you can deduct include:

  • Depreciation
  • Lease payments
  • Vehicle registration fees
  • Licenses
  • Gas
  • Insurance
  • Repairs
  • Oil
  • Garage rent
  • Vehicle titles
  • Tolls
  • Parking fees
Remember, you may only take actual expenses which are documented, and only a percentage of the expenses representing business use of the vehicle. You may not deduct fees and expenses related to commuting back and forth from home to your business; they are not considered business expenses.

Standard Mileage Deduction
The alternative to recording and deducting actual business expenses for use of your car is to take the IRS standard mileage rate. For this deduction, you must keep track of all business miles traveled by car/truck and multiply those by the current year standard IRS mileage rate. For example, if your records show you traveled 981 miles in 2009 for business purposes, you multiply that amount by the IRS standard mileage rate for 2009 (55 cents).

Which Method to Use?
The decision about whether to use actual expenses depends on how much you use the vehicle for business, what method you used last year, and other factors. Check with your tax adviser before selecting one of these methods of calculating business expenses for use of your car.

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