Deducting Business Vehicle Expenses

Every time you fill up at the pump, you're reminded that operating a vehicle isn't cheap. Fortunately, there is some relief from the IRS.

The table below lists the standard mileage rates for 2012.

Standard mileage rates	2012
Business miles	55.5 cents for all of 2012 (also 55.5 cents for July through December of 2011, and for January through June of 2011, the rate was 51 cents per miles).
Miles driven for medical or moving expenses	23 cents per mile for all of  2012 (down from 23.5 cents for July through December 2011. For January through June 2011 the rate was 19 cents per mile).
Miles driven in service of a charity	14 cents for all of 2012 (unchanged from 2011)

Although the standard mileage rate is easier for recordkeeping purposes, you almost always get a larger deduction by keeping track of actual expenses. You can write off the business-use percentage of operating costs such as gasoline, oil, maintenance and insurance. Plus, you can deduct depreciation.

To use the actual expense method, you must keep a log to record the time, place, mileage and purpose of each business trip, along with the total mileage for the year. That allows you to calculate the business use percentage.

Contact us to learn the most tax-effective ways to operate vehicles for business purposes.