Tax Tip of the Week
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For the week of
April 30, 2001
Choose your auto expense method wisely
If you drive your car for work, you have an important decision to make. The IRS
allows two different methods to calculate your tax deduction - the actual expense method and the standard mileage
method.
The actual cost method entails keeping
receipts for all the expenses incurred to operate your vehicle. Only the business portion of expenses is deductible.
For example, if your business mileage is 15,000 and your total mileage is 20,000 this year, you can deduct 75%
of your automobile expenses.
The standard mileage method allows
you to simply multiply your business mileage by 34.5 cents per mile, the IRS's standard mileage rate for 2001.
So if you drive 10,000 miles in connection with your business, you can write off $3,450.
You can't avoid recordkeeping. With either choice, you have to keep track of your business mileage and the total
mileage driven each year.
The rules governing business car deductions are full of exceptions and limitations.
To be certain you use the method that's right for you - and maximize your tax savings - give us a call. We can
review your situation and options with you.
Click here to view previous tax tips.
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provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders,
and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
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