W. Edward Newton Jr., CPA, CFP
13850 Ballantyne Corporate Place, Suite 500 | Charlotte, NC 28277 |
If you are self-employed and use
your car for business, you can deduct certain business-related
There are two options for
Actual Expenses. To use
the actual expense method, you need to figure out the actual
costs of operating the car for business use. You are allowed
to deduct the business-related portion of costs related to
gas, oil, repairs, tires, insurance, registration fees,
licenses, and depreciation (or lease payments).
Standard Mileage Rate. To
use the standard mileage deduction, multiply 58 cents (in
2019) by the number of business miles traveled during the
Car expenses such as parking fees and tolls attributable to
business use are deducted separately no matter which method
WHICH METHOD IS
For some taxpayers, using the standard mileage rate produces a
larger deduction. Others fare better tax-wise by deducting
actual expenses. You may use either of these methods whether
you own or lease your car.
To use the standard mileage rate for a car you own, you must
choose to use it in the first year the car is available for
use in your business. In subsequent years, you can choose to
use the standard mileage rate or actual expenses. If you
choose the standard mileage rate and lease a car for business
use, you must use the standard mileage rate method for the
entire lease period - including renewals.
Opting for the standard mileage rate method allows you to
bypass certain limits and restrictions and is simpler;
however, it's often less advantageous in dollar terms.
Generally, the standard mileage method benefits taxpayers who
have less expensive cars or who travel a large number of
The standard mileage rate may understate your costs,
especially if you use the car 100 percent (or close to it) for
Tax law requires that you keep travel expense records and that
you show business versus personal use on your tax return.
Furthermore, if you don't keep track of the number of miles
driven and the total amount you spent on the car, your tax
advisor won't be able to determine which of the two options is
more advantageous for you at tax time. It is essential to keep
careful records of your travel expenses (if you use the actual
expenses method you must keep receipts) and record your
You can use a mileage logbook or if you're tech-savvy, an app
on your phone or tablet. A number of phone applications (apps)
are available to help you track your business expenses,
including mileage and billable time. These apps also allow you
to create formatted reports that are easy to share with your
CPA, EA, or tax preparer.
To simplify your recordkeeping, consider using a separate
credit card for business.
If you need help or have a
question, as always please contact us here at the office at
on our Facebook FAN Page
everyone!! We've recently updated our business/fan page for
If you want updates on tax or
related subjects, click on
and LIKE our page PLUS we'd love for you to
RECOMMEND US on Facebook,
click here to take you to the Review page so you can write
We'll post new relevant
information on tax reduction, accounting & finance that you can read and comment on.
Thank you in advance for
Do Me A Quick Favor And Give Me An
Online REVIEW on Google+ Local?
you are a local business like I am, more and more people FIND
you by going online and searching. To help me be found
the same way by good customers like you would you take 2
minutes and give me a Review on my Google+ Local listing?
click here and it will take you to my listing. From
there just click on the Write a Review button.
Thank you in advance for your help!
If you have any questions about giving us a Review or have an accounting or
investments question about yourself or your business, please give me a call at
704-552-8689. I can help guide you in the right
As always you can call our offices if you have any
questions about these or any other accounting, tax,
financial planning or Quickbooks related issues, at
Regards, W. Edward Newton Jr.,
Certified Public Accountant