Should I break out vehicle expenses, or just use the standard mileage deduction on my schedule C?

I have a couple of cars that I use exclusively to deliver items for my small business. On my schedule C, I’m trying to decide whether to report the actual expenses, or just use the standard mileage rate. My sense is that the actual expenses will be more, but I’m not sure I have the right documentation. I kept records for regular maintenance and upkeep (e.g. oil change, repair after accident, etc), but I only have receipts for a portion of the gas throughout the year (~60%). Can I get by with a reasonable run-rate estimate (e.g. 50 miles/day @ 32 MPG), or should I just switch to the standard mileage deduction?

Answers

  • 2 out of 4 people found this answer helpful

    EA, MBA San Francisco, CA

     

    If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation. However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use. You cannot deduct miles for commuting to work unless you are transporting items for your livelihood such as tools, paint, music equipment, etc.

    You can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction. If you use the standard mileage rate, you can add to your deduction any parking fees and tolls incurred for business purposes. Standard miles rates for 2013 are:

    • 56.5 cents per mile for business miles driven.
    • 24 cents per mile driven for medical or moving purposes.
    • 14 cents per mile driven in service of charitable organizations.

    If you 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. Then, in later years, you can choose to use the standard mileage rate or actual expenses. 

    If you choose to depreciate your car in the first year you cannot switch to standard milage in later years.

    If you lease a car and you choose the standard mileage rate, you must use the standard mileage rate method for the entire lease period (including renewals).

    To use the actual expense method, you must determine what it actually costs to operate the car for the portion of the overall use of the car that is business use. Include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments)  

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  • 0 out of 0 people found this answer helpful

    CFP® Leesburg, VA

    Since you do not specify the number of cars in question, I should point out that the standard mileage rate cannot be used if you have 5 or more vehicles being used for your business at the same time.  The standard mileage rate for business is $.565/mile for 2013 and is based on an annual study of the fixed and variable costs of operating an automobile..  For most people, using the standard rate works out to be more advantageous than trying to calculate all the actual auto expenses, including: gas, oil, tires,lubrication, repairs, garage & parking fees, insurance, tolls, licenses and depreciation.  If you do not have decent records of all of these expenses, you are better off using the standard mileage rate for this year and keeping more complete records going forward.

    Remember also that commuting miles are not deductible.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
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