What methods may be applied to deduct business use of a car?
Costs of operating a car for business are deductible to the extent it is used for business, not personal use. Two cost methods are available – use of a standard mileage rate or the actual expense method. The standard mileage rate for January 1st through June 30th of 2008 is .505 cents. The standard mileage rate for July 1st through December 31 of 2008 is .585 cents per mile. You may include expenses for parking and tolls if you choose to use the standard mileage rate. With the actual expense method, you are allowed deductions for the cost of oil, gas, repairs, tires, insurance, licenses, garage rent, parking, tolls and depreciation. Each method requires expenses to be properly documented with adequate records, and special rules apply to the use of either method, including rules for leased vehicles or the extent that depreciation is allowable. We can help you consider the benefits of each option to decide which method will maximize your deduction.
