If you drive a car or truck, you've probably noticed that gas is getting pricey! Even out here in the Midwest I have seen gas pumps at $4 per gallon. Some experts have predicted prices will continue climbing to $5 per gallon or more. With gas prices so high, it's important to choose the right way to deduct car and truck expenses. I want to make sure you understand the issue.
You have two ways to calculate deductible car and truck expenses:
1. The "actual expense" method lets you deduct the "business use percentage" of all your actual expenses. These include depreciation and interest (if you buy) or lease payments (if you lease), insurance, gas, maintenance and repairs, parking, and tolls.
2. The "mileage allowance" method lets you deduct 58.5 cents/mile.
The problem with the allowance method is that even with the new 58.5 cents per mile rate, it is same for every car on the road whether you drive a hybrid or a Hummer. In actuality the method your are using may be far less than your actual costs! The American Automobile Association's recent survey, "Your Driving Costs (2008)," reports actual costs ranging as high as 91 cents/mile for an SUV driven 10,000 miles/year. These figures are based on gas at $2.941/gallon!
If you deduct automobile expenses or are reimbursed from your employer you may want determine which is the best method for you. If you'd like us to show you how to make the most out of your car and truck expenses, please contact Amanda at our office ahansen@kopsaotte.com and we will tell you how we can help.
