Last week the RDTC – Tax Help Blog posted a new article in their deduction of the week series. The entry explains how to deduct expenses related to the business use of a vehicle. You can find a section of the article below, or click here for the full text.
Actual Expense Method
The first option for calculating your deduction is the actual expense method, where you calculate the exact cost of your business use. Expenses include depreciation, licenses, lease payments, gas, insurance, repairs, garage rent, etc. However, in order to calculate this deduction you will have to determine the exact percent of your car usage that was business related, which can very quickly become a huge headache. For more information on the actual expense method, check out IRS Publication 463.
Standard Mileage Rate Method
The second and less complicated way to calculate your deduction is called the standard mileage rate method. You deduct a certain value for every mile driven for business. In 2010 the standard mileage rate is $0.50 for every mile driven, plus all business related tolls and parking fees. This does mean you need to track every mile used for business. This can be done by keeping a logbook to show the date, purpose of the travel and the number of miles driven.
Claiming the Deduction