Business Auto Expenses

Business Auto Expenses

The question came up today as I was meeting with a new client about automobile expenses. The business owner has the option of either deducting the actual automobile expenses used for the business or using a standard mileage rate. Because automobiles can be used for both personal and business purposes, the IRS terms these vehicles as “listed property”. The owners must keep a representative mileage log. Even if the owner chooses not to use the standard mileage rate as a deduction, they still need to keep a log to document the business and personal use of the vehicle. The IRS will allow a mileage log to be completed using three representative months of the year. The mileage log has three documentation components. They are…

  1. The date
  2. The business purpose
  3. The actual business miles driven