Valuable Tax Deductions For Your Vehicle You Can't Afford To Miss

Is your business missing out on valuable tax deductions you can take for the use of your personal vehicle for business purposes?If you haven't done so already, you should definitely beat a path to the door of your local office supply store and pick up a notebook for logging the mileage you drive to conduct businessand be sure to log the miles you drove to buy it! Not taking the trouble to do this is like letting your pricey gasoline flow onto the pavement instead of into your tank. Even if you work at home most of the time, miles you've driven to purchase office supplies, buy stamps or mail packages, and other errands for your business can translate into big tax deductions. With fuel costs soaring, you are literally throwing money down the drain if you are not keeping track of this mileage and taking the deductions for it to which you're entitled as a business owner. And the first entry you need to make is the beginning mileage on the odometer as of January. You'll also want to make sure that you keep track of all your automobile expenses associated with that personal vehicle that you're using for business.(See why in my article "Valuable Tax Deductions for your Vehicle You Can't Afford to Miss"). The dramatic surge in fuel costs has not been lost on the IRS. Of course, gasoline prices began to edge up shortly after the beginning of the war in Iraq; but the devastation wrought by Hurricane Katrina prompted the IRS to offer a valuable money-saving solution for business owners. (If you live outside the U.S.A. you should check your tax authority's website for similar provisions.) Last year,for , the IRS increased the standard mileage rate for the use of a vehicle (car, van, or truck) by cents a mile, to . cents a mile for all business miles driven. However, in the wake of Katrina, that rate was increased further to . cents a mile for the business miles driven in the months of September, October, November, and December, . This increased mileage rate ended with the end of . The new mileage rate for , effective January , is now . cents per business mile driven. You can maximize this deduction if you're careful to consolidate business and personal errands. For example, I wait until I need to go to the post office to ship a package for my business to stop to at the drug store and supermarket right next door to pick up groceries. What would have been "dead" mileage becomes a deductible business trip, as long as you've logged your business purpose in your mileage logbook. In addition, for both and , the IRS also encouraged Katrina-related charitable relief activities by granting higher rates for miles deductible and miles reimbursable driven for such activities. Of course, the use of these mileage allowances can be rather complicated. For example, you cannot take additional deductions for business use of an automobile to which you have already applied the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section deduction for that vehicle that your business purchased directly. And if you're using a personal vehicle for your business, don't forget to calculate the percentage of total miles for the year that you travel for business purposes. At the end of , you'll note the year-end odometer reading in your mileage logbook and subtract from it the odometer reading that you recorded this month. Then you'll add up all miles driven for your business that you have recorded and divide it by that total mileage to calculate the percentage of total miles you used for your business. If it turns out that % of your total mileage on that personal vehicle was for business purposes, you can deduct % of all your expenses for maintaining that vehicle: not only fuel, but all trips to the garage for routine maintenance or special repairs as part of your business expenses for the year. The devil is in the details, as always, of course. You will want to consult your tax accountant on how best to apply the rules to your situation. If you prepare your tax returns yourself, you can get the details directly from the IRS website: (C)