1) Odometer reading needed at first of year and end of year. Odometer reading must be proven by print-out of repair facility record of your car for whole year. Or, copy of oil change or minor repair service.
2) Two readings are necessary: First of year. End of year.
3) No daily odometer readings are necessary during year.
4) A twelve month calendar must be kept of business miles by day, by name of client, as such, and total daily miles. Add up all the circled mileage by day, for the whole year.
a.) Business Miles (From Calendar)
b.) Total Miles (From Odometer)
c.) Commute Miles (Added Up/Estimated)
d.) Other Miles (Inferred/Deduced)
5) Total business miles are then multiplied by 44.5 cents per mile to arrive at the expense allowed for auto and truck.
6) Alternate method of auto and truck expense: The actual cost of :Depreciation, Gas, Oil, Repairs, Washes, Insurance, Leases, etc. All of these costs are added up and higher of mileage or actual can be used.
7) Depreciation = normal wear and tear measured in $ allowed per year. The maximum allowed for passenger cars for first year is $2,960. Trucks and vans can be depreciated up to $25,000 in the first year.
Copyright © Michael G Thomas CPA.