20 / 46
SOAR TO SUCCESS
| AUGUST 2015 |
Core Business Strategies
The IRS offers two methods to calculate
your deduction: The Standard Mileage or
The Actual Expense Method and if you
qualify for either of these methods you
may want to calculate your deduction
prior to choosing your method.
Under the Standard Mileage Rate, you’re
able to take your business miles times
the appropriate rate for the year, which
for 2015 is 57 and a 1/2 cents per mile.
To choose this rate for a car that you own
you must select this method in the first
year the car is available for business. You
can choose to use a different method
in subsequent years but it must be the
method you choose in the first year the
car’s available for business use.
If you choose the standard mileage rate,
the IRS requires you to substantiate
your expenses for your deduction.
This includes a standard mileage log
and third party service tickets to show
your odometer readings. I recommend
getting your car serviced in January and
December so you show your odometer
readings for the whole year to support
the total miles that you’re claiming.
The standard mileage rate for business
is based on an annual study of the fixed
and variable costs of operating a vehicle
including
depreciation,
insurance,
repairs, tires, maintenance, gas and
oil. The deductible mileage rate for
medical and moving purposes is based
on the variable costs, gas and oil, and the
amount you can deduct for charitable
use is set by law in case you’re wondering
how these rates are.
Just for clarification, a vehicle includes a
car, van, pickup, or panel truck. For those
of youwith a fleet of four ormore vehicles
used simultaneously, the standard
mileage method is not available to you.
The standard mileage method is also not
available to you if you have previously
claimed bonus depreciation, section 179,
or if you are a rural mail carrier who has
received a reimbursement.
Under the actual expense method, you
may be able to take a portion or all of
your repairs and maintenance, tires, fuel,
oil and depreciation. The amount of the
deduction is determined by the amount
that you use your vehicle in business.