Business Tips

Below, you will find an additional tip to help you take advantage of an important business deduction. Please contact us at (301) 649-1600 in Silver Spring, Maryland or at (202) 669-2393 in Mclean, Virginia or by email at cstanleycpa@verizon.net to learn more about how we can guide you in starting and maintaining your small business.

Business Use of Your Car

Did you know that:

• Generally, business mileage is established through odometer readings. In addition to business and destination information, you must keep adequate contemperaneous records in order to ensure the deductibility of business miles driven.


• The standard mileage allowance rate method (51 cents per mile for business miles driven in 1/1/11 to 6/30/11, and 55.5 cents per mile for business miles driven in 7 /1/11 to 12/31/11) only applies to a car that you own or lease. The standard mileage rate is not available for cars used for hire (i.e. - taxicabs) or for more than four cars used simultaneously (i.e. - fleet). Use of the standard mileage rate in the first year of business is considered an election to exclude the car from MACRS depreciation. You may not use the business standard mileage rate for a vehicle after using any depreciation method under MACRS, after claiming a Section 179 deduction for the vehicle.
  
  
• The business portion of parking and tolls may be deducted in addition to the standard mileage rate.
  
  
• If you elect to use the standard mileage allowance rate method, depreciation is included in the rate.
  
  
• Depreciation may be deducted for use of your vehicle only if you elect not to use the standard mileage rate method to account for business use of your car.

• A self-employed person may claim interest paid on the business portion of a car as a business expense.

Other non-business mileage allowances:

• Medical - transportation expense allowance by car is19 cents per mile for 1/1/11 to 6/30/11, and .235 cents per mile 7/1/11 to 12/31/11 .
  
  
• Charitable - transportation expense allowance by car is 14.0 cents per mile or actual expenses incurred for year 2011. Under the standard mileage rate method, additional deductions may be taken for parking fees and tolls.
  
  
• Moving - moving expenses for automobile use are deductible at 19 cents per mile for 1/1/11 to 6/30/11, and .235 cents per mile 7/1/11 to 12/31/11assuming that the taxpayer meets other eligibility requirements to claim moving expenses.

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