If you use a car or other vehicle for your business, you may be able to deduct the expense of operating that vehicle on your taxes. Businesses generally can use one of the two methods to figure deductible vehicle expenses:
- Standard mileage rate
- Actual car expenses
For 2019, here are the standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes:
- 58 cents per mile driven for business use
- 20 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
Of course, you always have the option of calculating the actual costs of using their vehicle for your business rather than using the standard mileage rates. Here are some facts to help you understand the differences between the two methods of figuring deductible vehicle expenses:
- If you want to use the standard mileage rate for a car you own, you must choose to use the standard mileage rate in the first year you use the vehicle. Then, in later years, you can choose to use either the standard mileage rate or actual expenses.
- If a you want to use the standard mileage rate for a car you lease, you must use this rate for the entire lease period.
- You must make the choice to use the standard mileage rate by the due date of your return, including extensions. You can’t revoke the choice.
- If you qualify to use both methods, you may want to figure your deduction both ways to see which gives a larger deduction.
- Here are some examples of actual car expenses that you can deduct for your business:
> Licenses
> Gas
> Oil
> Tolls
> Insurance
> Repairs
> Depreciation – limitations and adjustments may apply
The IRS Publication 463, Travel, Gift and Car Expenses, gives a full list of actual expenses and how to calculate them.
This is only one of the many decisions to be made when doing tax planning. We welcome your call for any tax planning questions you may have. Take a moment to contact us!
