Using a Vehicle for Business: Q&A
How does the IRS identify a “vehicle”?
What are transportation expenses?
- Visit customers,
- Attend a business meeting held at a location other than your regular workplace, or
- Go from home to a temporary workplace that is not your company’s principal location.
The daily commute to and from your regular office is not deductible. The IRS considers this personal commuting expenses.
What if I’m on an overnight business trip away from home?
What if I use my car for both business and personal purposes?
I work in a home office. Can I deduct any driving expenses?
How do I calculate my deductible expenses?
There are two options. Using the standard mileage rate, you can claim 57.5 cents per mile (2015 tax year figure). You are required to use this method for the first year you use the vehicle for business purposes. After that initial year, you can choose between the standard mileage rate and actual car expenses. These include depreciation, oil and gas, insurance, and repairs.
Depreciation? Isn’t that difficult to calculate?
Can I take a Section 179 deduction for my vehicle?
What kind of vehicle expense records do I need to maintain?
Where will I be reporting transportation expenses?
If you are self-employed, you will report business-related vehicle expenses on Schedule C or Schedule C-EZ (Form 1040). Farmers should use Schedule F (Form 1040). You’ll also want to complete a Form 4562, which is used to report depreciation and the Section 179 deduction.
Maintaining accurate records for car and truck expenses is time consuming and detail intensive. And that’s once you understand all of the IRS’s rules and exceptions surrounding this deduction. To avoid having to fix completed tax documents that the IRS has questioned, talk to us before you put a vehicle into business use. We’ll be happy to evaluate your transportation situation and guide you through the process.