If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. You generally can deduct either your actual expenses or the standard mileage rate.
Actual expenses
If you deduct actual expenses, you can deduct the cost of the following items:
| Depreciation | Lease payments | Registration |
| Garage rent | Licenses | Repairs |
| Gas | Oil | Tires |
| Insurance | Parking fees | Tolls |
If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expenses based on the miles driven for each purpose.
Example
You are the sole proprietor of a flower shop. You drove your van 20,000 miles during the
year. 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use.
You can claim only 80% (16,000 / 20,000) of the cost of operating your van as a business expense.
Standard mileage rate
Instead of figuring actual expenses, you may be able to use the standard mileage rate to
figure the deductible costs of operating your car, van, pickup, or panel truck for business
purposes. You can use the standard mileage rate for a vehicle you own or lease. The standard
mileage rate is a specified amount of money you can deduct for each business mile you drive.
It is announced annually by the IRS. To figure your deduction, multiply your business miles
by the standard mileage rate for the year.
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Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. |
Choosing the standard mileage rate
If you want to use the standard mileage rate for a car you own, you must choose to use it
in the first year the car is available for use in your business. In later years, you can choose
to use the standard mileage rate or actual expenses.
If you want to use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period(including renewals).
Additional information
For more information about the rules for claiming car and truck expenses, see
Publication 463, Travel, Entertainment,
Gift, and Car Expenses.
Information courtesy of the Internal Revenue Service.
Business Expenses:
Business Start-Up Costs
Depreciation
Business Use of Your Home
Car and Truck Expenses
