Business Deductions
- Amortization
- Business Losses and Net Operating Losses
- Car and Truck Expenses
- Day-Care Services
- Depreciating Business Property
- Depreciating Your Car
- Domestic Production Activities Deduction
- Health Insurance Deduction
- Home Office Deduction
- Meal and Entertainment Expenses
- Organizational Costs and Start-up Costs
- Qualified Plan Awards
- Schedule C Expenses
- Section 197 Intangibles
- Should You Sell or Trade in Your Car?
- Start-up Costs
- Travel Expenses
More Tax Topics
- Business Structures
- Hiring Workers
- Retirement
- Top Tax Myths
- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Updated for 2011
Small Business Deductions: Car and Truck Expenses
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Switching From the Mileage Allowance Method to the Actual Expense Method
If you switch from the mileage allowance method to the actual expense method, you must use straight-line depreciation for that vehicle for its remaining recovery period, provided there is still sufficient basis remaining.
Bear in mind, the mileage allowance has built into it an allowance for depreciation. Consequently, if the depreciation portion of the mileage allowance that you've been deducting over the years would reduce the vehicle's basis to zero, no additional depreciation may be deducted for that vehicle at the time you switch to the actual expense method.
The depreciation portion included in the business mileage allowance are as follows:
- 12 cents per mile: 1994-1999
- 14 cents per mile: 2000
- 15 cents per mile: 2001 and 2002
- 16 cents per mile: 2003 and 2004
- 17 cents per mile: 2005 and 2006
- 19 cents per mile: 2007
- 21 cents per mile: 2008 and 2009
- 23 cents per mile: 2010
- 22 cents per mile: 2011
Keep in mind, if you dispose of your vehicle, you must reduce its basis by the above amounts for purposes of determining gain or loss.
Leased Vehicles
If you start using the IRS mileage allowance method for a leased vehicle, you must use it for the entire lease period, including renewals.
If you use your vehicle for both business and personal use, multiply the total lease charges by your business-use percentage to find the deductible amount. For example, if you traveled a total of 60,000 miles for the year for personal and business purposes in vehicle and your business miles for the year were 48,000, your business-use percentage is 80% (48,000/60,000).
Next:
Car Expenses: Where to Claim the Mileage Allowance
Related Links
- Turning Commuting Mileage into Deductible Business Expense
- Mileage Log
- Mileage Sampling
- Employees and Car Expenses
- Hybrid Vehicles
- Phaseout Rule for Hybrid Vehicles
- Qualifying for the Hybrid Credit
- Phaseout of Hybrid Credit
- Alternative Minimum Tax (AMT)
- Audit Proofing Your Car Deduction
- Tracking Business Miles
- Estimates of Car and Truck Expenses
- Electric Cars
- Annual Depreciation Limits for Electric Cars
- Should You Sell or Trade in Your Vehicle?
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