By Dominique Molina, CPA
Ever notice how many negative concepts are associated with automobiles: traffic jams, road rage, rising fuel prices, gas-guzzlers, collisions, traffic court? The list goes on and on! Here is some good news about how your automobile can help lower your tax bill.
The Tax Code allows us a tax deduction in an amount equal to either the standard mileage rate or actual expenses for each mile we drive related to business. But have you ever wondered which would help lower your tax bill?
Standard Mileage Rate versus Actual Expenses
With the oil prices rising as fast as I drive on the freeway (I mean – I ALWAYS drive the speed limit officer) have you ever stopped to consider how much it actually costs to drive your vehicle?
The IRS for 2009 provides a standard mileage deduction in the amount of 55 cents per mile driven for business purposes. Sounds great and doesn’t require much documentation, right? Perhaps you’ve even been told by an accountant, just take the standard mileage deduction it’s easier.
Although easy, one downfall to taking the standard mileage rate is that it is the same for everyone. It doesn’t take a math genius to realize that driving a Hummer probably costs slightly more than driving a Honda Civic. [click to continue…]
