When you own a business, it is always helpful to know what expenses you are allowed to deduct. One of the most important deductions to remember is your business auto expenses. There are two different ways to calculate this deduction.
Standard Mileage Deduction
The first method to deducting business auto expenses is to use the standard mileage deduction. Calculating this is quite simple. For every business mile that is driven, you can deduct 54.5 cents in 2018. It is important to keep track of both total miles driven, as well as actual business miles.
What defines a business mile? Miles that can be deducted as an business auto expense are those driven for purely business purposes. These miles can include miles driven on business trips, miles driven to meet clients or vendors, miles driven to pick up supplies, and miles driven between business locations, for a few examples. Keep in mind that miles driven to and from home to your primary place of business are NEVER deductible.
Actual Expenses Deduction
If you choose not to use the standard mileage deduction, then you can deduct your business auto expenses by using your actual expenses. Actual expenses include amounts paid for your business use of your car. These expenses can include the following:
- Garage Rent & Car Rental Fees
- Gas, Oil, & Tires
- Insurance & Property Tax
- Licenses & Interest
- Repairs
- Parking Fees & Tolls
As with all expenses, the most important factor is to keep accurate and detailed records. Remember as well that expenses, whether using the standard or actual, must be allocated between personal and business use. Depending on how often you drive for business, your business auto expenses can provide a decent deduction!
