Automobile Expenses: Do you use your car for business purposes?

If you use an automobile for
business, you may be able to
receive a tax deduction to lower
your income tax. Deducting
auto expenses requires diligent
recordkeeping and accurate
calculations. There are two ways
to calculate your auto deductions:
• Actual expenses. Track all
eligible deductions, such as
the cost of gas, oil, repairs,
insurance, maintenance,
tires, washing, licenses and
depreciation or lease payments.
• Standard mileage rate. Instead
of tracking the above expenses,
track the business mileage you
accrue and use a standard rate.
For 2015, the standard mileage
rate is 57.5 cents per mile.
Whether you own or lease your
vehicle, both of these methods
are viable options.

​Taxpayers who wish to use the
standard mileage rate in lieu of
actual expenses for computing
deductible vehicle expenses must
elect to do so in the first year of
business use. Switching to the
standard mileage rate in a later
year is not an option.

To receive these deductions, you
must keep accurate records of the
miles incurred for business, dates
of business use, destinations
and the business purpose. You’ll
also need to note the odometer
readings at the beginning and end
of the year to determine the total
miles for all uses. If records are
not accurate enough and you are
not able to substantiate your claim,
the IRS may disallow a deduction
for mileage.

Please note that you cannot
deduct commuting mileage—
that is, mileage from your home
to your regular job. However, if
you’re self-employed and maintain
an eligible office in your home,
you can deduct the mileage to
and from your clients, as well
as between jobs. You can also
deduct mileage between jobs
or to a temporary assignment. If
you don’t have a regular place
of business, you can only deduct
your transportation expenses to a temporary location outside of your general area of employment.

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