Car Expenses

You can choose between two methods for deducting business-related car expenses:

  1. Actual Expense
  2. Standard Mileage Allowance for 2017 is 53.5¢/mi.

The standard mileage rate for 2016 was $0.54/mile.

You must make the decision in the first year you own the car (or place the car in service for business). If you choose the Actual Expense method in the first year, you cannot use the standard mileage expense in later years.

The Actual Expense method allows you to deduct all of your out-of-pocket costs for operating your car for business, plus an allowance for depreciation if you own your car.

Actual Expenses include:

Depreciation
Garage Rent
Gas
Insurance
Licenses
Oil
Parking Fees
Repairs
Tolls
Towing
Lease Fees
Tires
If you are self-employed, an elect the Actual Expenses method, the interest on your car loan is also deductible if used more than 50% for business.

The Standard Mileage Allowance also includes deductions for:

Parking Fees
Towing
Tolls
It is VERY important that you record the number of miles driven for business, the date of each trip, the designation for the travel, and the reason. You must also keep track of the total number of miles driven each year. Feel free to use our mileage record form (.pdf 39KB) for your tracking purposes.

For tax purposes, if you operate as a sole proprietor or as a single member of an LLC, Car Expenses for the business are recorded on IRS Form 1040, Schedule C of the IRS tax forms and the mileage breakdown is recorded on IRS Form 2106.