Vehicle Expenses

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Vehicle Expenses

If you began using a car, van, pickup, or panel truck for business purposes, you may be able to deduct the expenses you incur in operating the vehicle. You generally can use either the actual expense method or the standard rate method to figure your expenses. If you deduct actual expenses, you must keep records of the cost of operating the vehicle, such as car insurance, interest, taxes, licenses, maintenance, repairs, depreciation, gas and oil. If you lease a vehicle, you must also keep records of these costs.

To avoid the burden of figuring actual expenses and of keeping adequate records, you may be able to use the standard mileage rate to figure the deductible cost of operating your vehicle. Keep in mind that you can use the standard mileage rate only for a vehicle that you own. For 2008, the standard mileage rate is 58.5 cents a mile* for all business miles. These amounts are adjusted periodically for inflation. If you want to use this standard mileage rate, you must choose to use it in the first year you place the vehicle in service for business purposes. Then, in later years, you can choose to continue using the standard mileage rate, or you may switch to the actual expense method. Other standard mileage rates are 19 cents a mile for moving and 14 cents a mile for services to a charitable organization.

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