An Oakland Calfornia based Tax Return Preparation Firm - Company Message

Your automobile may provide you with several tax deductions that may lower your income tax. As with all deductions, it’s important to maintain accurate records of your expenses.

Business

• You cannot deduct commuting mileage – that is, mileage from your home to your regular job.
• If you use your car for business purposes, you may use either the standard mileage rate or actual car expenses.
• If you are self-employed and maintain an eligible office in your home, you can deduct the mileage to and from your client’s or customer’s place of business, as well as between jobs.
• As an employee, you can deduct mileage between jobs or to a temporary assignment.
* The IRS defines a temporary work assignment as lasting a few days or weeks, but less than a year.
• If you do not have a regular place of business, you can only deduct your transportation expenses to a temporary location outside your
general area of employment.
• If you are an Armed Forces Reservist, you can generally deduct your transportation expenses to attend meetings.
* The meetings must take place on a day that you normally work.
* You cannot deduct expenses for transportation on a day you normally do not work.
* If you travel and stay overnight to attend a Guard or Reserve meeting, you can deduct your travel expenses.

Expenses

There are two ways to calculate your auto deductions – the standard mileage rate or actual expenses. These methods are available whether
you own or lease your vehicle.

• Standard Mileage Rate Method

* For most taxpayers, the standard mileage rate is easier to use.
* In 2009, the rate is 55 cents and 50 cents in 2010.
* To calculate, multiply the rate by your business miles to figure your deduction.
* In addition to the standard mileage rate, you can also deduct the cost of business-related parking fees, tolls, and state and local taxes
not paid with the acquisition or disposition of the vehicle.
* If you are self-employed, the business percentage of the interest on your car loan is also deductible.

• Actual Expense Method

* Actual expenses such as the cost of gas, oil, insurance, repairs, maintenance, tires, washing, licenses, and depreciation or lease
payments are eligible.
* You can also deduct the cost of business related parking fees, tolls, and state and local taxes not paid with the acquisition or disposition of the vehicle.
* If you are self-employed, the business percentage of the interest on your car loan is also deductible.
* This method requires you to save all receipts and keep very detailed records.
* If you use your car for personal and business purposes, you’ll have to divide the expenses between the personal and business portion.

Example: If you use your car 50% of the time for business and 50% of the time for personal reasons, you’ll only be able to deduct 50% of the cost of your eligible expenses.

Record Keeping

• You’ll need to keep accurate records of the miles incurred for business purposes, dates of business use, destinations, and business
purpose.

• You’ll need odometer readings at the beginning and end of the year to determine the total miles for the year for all uses.
* Tip: Keep a logbook in your vehicle’s glove box for recording the mileage. You’ll be able to easily calculate your mileage at the end of
the year.
• The important aspect is to make sure you maintain accurate records. The IRS may disallow a deduction for mileage if you are
unable to substantiate your deduction.
• If you use the standard mileage rate, you cannot use your actual expenses.

Medical Mileage

• If you use your car to obtain medical care in 2009, the medical standard mileage rate is 24 cents and 16.5 cents in 2010.
• Medical care includes trips to the doctor’s office, dentist’s office, or to the hospital to obtain medical treatment.
• Parking fees and tolls associated with medical treatment are also deductible.
• If you choose to use actual car expenses, you can only deduct the cost of gas and oil, not depreciation, repairs, etc. Your tax preparer
will add these expenses to your other medical expenses and educt them on Schedule A subject to the normal limitations (7.5% of adjusted gross income).

Charitable Mileage

• You can deduct 14 cents per mile if you use your car for charitable purposes. You can also deduct parking fees and tolls.
• If you choose to use actual expenses, you are again limited to unreimbursed expenses for gas and oil.
• You cannot deduct mileage or expenses for charitable purposes if a significant part of the travel is for personal pleasure.

Moving Mileage

• If you move and qualify for the moving expense deduction, the IRS allows you to deduct either the actual expenses for miles driven or a standard mileage rate for the relocation. In 2009, the moving standard mileage rate is 24 cents per mile and 16.5 cents in 2010.
• You can also deduct parking fees and tolls.
• If you choose to use actual expenses, you are again limited to unreimbursed expenses for gas and oil.

This brochure contains general tax information for taxpayers.
As each tax situation may be different, do not rely upon this
information as your sole source of authority. Please seek
professional advice for all tax situations.

#854 – © Copyright May 2010
National Association of Tax Professionals
PO Box 8002
Appleton, WI 54912-8002
www.natptax.com


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