The 7 Basic Rules For Deducting Business Auto Expense

You should at least consider these issues when deciding whether to use the standard mileage rate or actual expense:

a)    The fuel economy (MPG) of the vehicle

b)    Bonus depreciation if it is a new purchase

c)    Total repairs or expected repairs and maintenance

d)    How many miles you expect to put on the vehicle

e)    Vehicle cost.

Here are 7 general guidelines that will help you decide:

1)    If you are going to drive a lot of business miles, and the car is generally a lower purchase cost, then STANDARD MILEAGE is best.

2)    If you’re not going to have a lot of business miles, and it’s an average cost vehicle used exclusively or primarily for business, then you lean toward ACTUAL EXPENSE.

3)    If you’re not going to have a lot of business miles, and it’s a more expensive car used exclusively or primarily for business, you should consider leasing and ACTUAL EXPENSE.

4)    If you are going to have low miles and it’s a lower cost vehicle used primarily or exclusively for business, I would lean toward ACTUAL EXPENSE.

5)    If you use the car part-time for business because you have a day job, you will typically use STANDARD MILEAGE.

6)    If you are going to buy a 6,000 pound or more SUV or truck, you will generally lean toward ACTUAL EXPENSE.

7)    If you have a high MPG (think hybrid or electric), but still have average use and miles, you will lean toward STANDARD MILEAGE.