Welcome

Reminder, track those auto expenses. Every little bit adds up. There are two ways to calculate auto expenses: actual expense and mileage.

Actual expense method includes auto maintenance cost, (oil changes, tire rotations etc), minor repairs (tires, windshield wipers, etc), auto insurance, personal property taxes, garage rent, gas, oil, fluids, depreciation, tolls, vehicle registration (tags) and parking. Also if you are self employed you may also deduct auto loan interest expense.

Mileage method includes miles driven, personal property taxes, tolls and parking fees. Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

54.5 cents for every mile of business travel driven.

18 cents per mile driven for medical or moving purposes.

14 cents per mile driven in service of charitable organizations.    (from IR-2017-204, Dec. 14, 2017)

Taxpayers can use either actual or mileage not both.  Documentation is required for method chosen or NO Deduction. Unless the auto is a high maintenance vehicle, usually mileage is easier to prove in event of an audit and usually results in a larger deduction (Note: depreciation is built into mileage rate).

To document auto expenses, keep a log (either written or electronic) showing: date mileage driven (or expense incurred e. g. filled gas tank), location traveled to or address and for what purpose (e. g. visited customer Smith for product sale).

Beginning of year and year end odometer readings can be helpful also.   Why keep mileage for both methods? Because the IRS Auto worksheet requires the total business miles and total annual mileage to calculate the auto deduction for both methods (especially applies if the vehicle is also used for personal use).   So remember to track your mileage, all those “little deductions” add up . ..