You can deduct vehicle costs on your taxes using actual vehicle
expenses or the standard mileage rate.
Actual Expenses: Collect Receipts and Write-Off Expenses that are
Deductible
Standard Rate: Log Mileage and Deduct using Standard Mileage rate
The STANDARD RATE may be more beneficial for individuals who have a
lot of mileage and low vehicle costs. Using the ACTUAL EXPENSE method
is only better when your vehicle costs are very high.
The standard mileage rate is used to figure the deductible cost of a
vehicle that is owned or leased. For Tax Year 2008, the IRS is
allowing taxpayers to deduct 50.5 cents per mile driven for the first
6 months of 2008, and 58.5 cents per mile driven for the final six
months.
FOR EXAMPLE
A person who spent $10,000 on gas but only traveled 10,000 business
miles would want to use the Actual Expense Method because it can yield
a larger deduction than the Standard Mileage Rate.
Actual Expense Method - $10K deduction for gas expense
Standard Mileage Rate - $5.85K standard deduction (10K * 58.5 Cents)
Use the Method that is most Advantageous!!!
A person who spent $5,000 on gas and traveled 20,000 business miles
might benefit more from the standard mileage deduction.
Actual Expense Method - $5K deduction for gas expense
Standard Mileage Rate - $11.7K standard deduction (20K * 58.5 Cents)
Pay attention to specific rules about listed property, depreciation
limits (which change often), and switching accounting methods. Whether
using the standard mileage or actual expense deduction, be sure to
track mileage and expenses related to your rental activity. You
usually won't know which method to use until the end of the tax year,
so it's best to just keep a good record of all vehicle activities.
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