Business Use of An Auto

Internal Revenue Service Standard Mileage Rates

The automoble information is from: Rev. Proc. 2008-72

Business Standard Mileage Rate is 55 cents per mile

Business Use Of An Automobile

A deduction is permitted for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Under that provision, an employee or self-employed individual may deduct the cost of operating an automobile to the extent that it is used in a trade or business.

The taxpayer must actually substantiate the elements of time, place (or use), and business purpose of the transportation expenses. The business standard mileage rate may be used in lieu of fixed and variable costs. A deduction using the business standard mileage rate is computed on a yearly basis and is in lieu of all fixed and variable costs of the automobile allocable to business purposes. Items such as depreciation (or lease payments), maintenance and repairs, tires, gasoline (including all taxes thereon), oil, insurance, and license and registration fees are included in fixed and variable costs for this purpose.

Parking fees and tolls attributable to use of the automobile for business purposes may be deducted as separate items.

The determination of using the standard mileage rate, actual expenses, or a change in the method to determine this expenses can be complex. This is a very basic summary. Please contact us to discuss your particular situation.

The information on this web site is for general guidance only. This general information is provided to represent a good faith effort to provide accurate and complete tax information. The information provided herein should not be used as a substitute for consultation with professional advisers. Every situation may be unique, please contact us to discuss your particular situation.