Using your personal car for business can take a toll on your vehicle. If the situation, you may qualify to deduct any expenses incurred from using your car for work. At tax time, you have the option of two methods to figure out what part of your expense is deductible.
You can use either the actual expense method, wherein you keep track of every expense you encounter, such as gas, oil changes, brakes, maintenance and repairs, tires, etc. You can also opt for the standard mileage deduction, where you’re only required to keep track of your mileage. The rate changes every year but is based on a per mile scale. In 2014, the rate was 56¢ per mile.
You can only use one method or the other. For example, if you opt for the standard mileage rate deduction, you need to use it for the pool tax year. You will not be able to deduct actual vehicle expenses.
If you own your car, and you want to use the standard mileage rate, you need to do so in the first year that you use your car for work purposes. That doesn’t necessarily mean it’s the same year that you bought the car. In the tax years that follow, you’ll have the option between the two different methods.
It’s important to note that you are not able to deduct expenses you incur traveling between your residence and your workplace. However, if you drive from one work site to another, you may qualify to deduct that travel. It you have to travel between your home and all work site that is outside of your usual business location, you likely qualify to deduct any expenses incurred as part of that travel.