There are two
methods of deducting the business use of your vehicle: Standard Mileage rate
and Actual Vehicle expenses. Unfortunately, both require you entering both total mileage (business combined with Personal) and personal mileage.
You
should make an earnest effort in accurately reporting the miles you drove.
Sometime, service records and oil change records can give you accurate tallies
of the total miles driven. For the business miles driven, see if there are
recurring trips that you make on a regular basis or look for proof of longer
trips (hotel records, business purchases, credit card records) to substantiate
your mileage.
As the name
suggests, the Actual Expenses method (keeping your receipts) requires you to add up all the money
actually spent in the operation of your vehicle. You then multiply this figure
by the percentage of the vehicle’s business use.
- For example, if half the
miles you drive are for business and half are for personal use, you will
multiply your total vehicle expenses by 50% to arrive at the business
portion (e.g. $9,500 total expenses x .50 business use = $4,750 business
expenses).
Some of the costs
you can include in your Actual Expenses are:
- Lease
payments
- Auto insurance
- Gasoline
- Maintenance (such as oil
changes, brake pad replacements, tire rotations)
- New tire purchases
- Title, licensing, and
registration fees (not deductible in all states; check with TurboTax to
see if this expense is deductible in your state)
- Vehicle depreciation (use a
depreciation table to calculate the amount, and then deduct only the
portion that applies to the business use of your vehicle)
The Standard Mileage
method is a much simpler way of calculating the business use of your car. It
does not require you to track individual purchases and save receipts. Instead,
you simply keep track of your mileage for the tax year. (Tip: Take a photo of
your odometer on New Year’s Day and save it, so you can always see where your
mileage stood at the beginning of the tax year.)
As with other tax
deductions, you must determine the percentage of your mileage that applies to
your business.
- If half the miles you drive
are for business and half are for personal use, you will multiply your
total mileage by 50% to arrive at the business portion (e.g. 10,000 miles
x .50 business use = 5,000 business miles).
Once you have
determined your business mileage for the year, simply multiply that figure by
the Standard Mileage rate.
- For tax year 2016, the
Standard Mileage rate is 54 cents per mile. Carrying through the example
above: 5,000 business miles x $.54 standard rate = $2,700 Standard Mileage
deduction.
You
can enter the unreimbursed business expenses here:
·
Go to Federal Taxes,
·
Click Deductions and Credits,
·
Select I'll choose what I work on
·
Select Job-Related Expenses under Employment
Expenses.
·
Select Yes to the Did you have any of
these expenses in 2016 for your W-2 income?
·
Follow along the interview and select Actual
Expenses
