Do You Deduct Your Car For Business Use?


If you own a business and use your vehicle for your business, you are entitled for auto deductions, which is important to reduce your taxable income. Do you know that there are different methods or options you can use to maximize your deductions?

You can generally figure the amount of your deductible car expense by using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, you may want to figure your deduction both ways before choosing a method to see which one gives you a larger deduction.

Standard Mileage Rate

For the current standard mileage rate, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses or search standard mileage rates on IRS.gov. To use the standard mileage rate, you must own or lease the car and:

  • You must not operate five or more cars at the same time, as in a fleet operation

  • You must not have claimed a depreciation deduction for the car using any method other than straight-line

  • You must not have claimed a Section 179 deduction on the car

  • You must not have claimed the special depreciation allowance on the car

  • You must not have claimed actual expenses after 1997 for a car you lease.

Actual Expenses

To use the actual expense method, you must determine what it actually costs to operate the car for the portion of the overall use of the car that's business use. Include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are business miles.

Note: Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expenses.

If you have any more questions or need help, please do not hesitate to call us at (832) 295-3353, or you can also set up an appointment with us at https://xqcpa-bookme.acuityscheduling.com/schedule.php.

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