A Quick Recap on Mileage Expenses
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Whether you own or lease the vehicle you use for business, you are entitled to claim business driving expenses. The simplest way to do this is to deduct the "standard mileage rate" of 37.5 cents per mile driven, up from 36 cents per mile in 2003. In order to use the standard mileage for a car, you must do so in the first year you own it. You can later switch to the alternate method of deduction, the "actual expense" method. However, if you start by using the actual expense method, you are not allowed to later switch over to the standard mileage rate method.

The real benefit of the standard mileage rate is simplified record-keeping. You must only take note of miles driven, date, destination, and business purpose in order to claim these deductions versus tracking every dollar spent on the vehicle. The standard mileage method shows the greatest benefits for inexpensive vehicles with low operating costs. One drawback to using the standard mileage rate deduction is that bigger deductions are sometimes available with the actual expense method, namely in the year the car is acquired. This is especially true given new tax law changes.

The key to both methods is thorough, consistent recordkeeping. No matter what method you use, it is important to maintain good records of either total mileage or expenses incurred in order to show the IRS. Given the essential differences in the two methods and the specific benefits provided by each, it is important to consult your tax professional at Talley & Company in order to ensure the proper deduction method is utilized. You may contact our offices by phone or email with the information provided in the contact section. The benefits of choosing the right method will become evident come tax time in the form of higher deductions and a lower tax bill.