Publication 334 |
2001 Tax Year |
Car & Truck Expenses
If you use your car or truck in your business, you may be able to
deduct the costs of operating and maintaining your vehicle. You also
may be able to deduct other costs of local transportation and
traveling away from home overnight on business.
You may be entitled to a tax credit for an electric vehicle
or a deduction from gross income for a part of the cost of a
clean-fuel vehicle you place in service during the year.
The vehicle must meet certain requirements and you do not have to use
it in your business to qualify for the credit or the deduction. For
more information, see chapter 12 in Publication 535.
Local transportation expenses.
Local transportation expenses include the ordinary and necessary
costs of all the following.
- Getting from one workplace to another in the course of your
business or profession when you are traveling within the city or
general area that is your tax home. Tax home is defined later.
- Visiting clients or customers.
- Going to a business meeting away from your regular
workplace.
- Getting from your home to a temporary workplace when you
have one or more regular places of work. These temporary workplaces
can be either within the area of your tax home or outside that
area.
Local business transportation does not include
expenses you have while traveling away from home overnight. Those
expenses are deductible as travel expenses and are discussed later
under Travel, Meals, and Entertainment. However, if you use
your car while traveling away from home overnight, use the rules in
this section to figure your car expense deduction.
Generally, your tax home is your regular place of
business, regardless of where you maintain your family home. It
includes the entire city or general area in which your business or
work is located.
Example.
You operate a printing business out of rented office space. You use
your van to deliver completed jobs to your customers. You can deduct
the cost of round-trip transportation between your customers and your
print shop.
You cannot deduct the costs of driving your car or truck
between your home and your main or regular workplace. These costs are
personal commuting expenses.
Office in the home.
Your workplace can be your home if you have an office in your home
that qualifies as your principal place of business. See
Business Use of Your Home, later.
Example.
You are a graphics designer. You operate your business out of your
home. Your home qualifies as your principal place of business. You
occasionally have to drive to your clients to deliver your completed
work. You can deduct the cost of the round-trip transportation between
your home and your clients.
Methods for Deducting
Car and Truck Expenses
For local transportation or overnight travel by car or truck, you
generally can use one of the following methods to figure your
expenses.
- Standard mileage rate.
- Actual expenses.
Standard mileage rate.
You may be able to use the standard mileage rate to figure the
deductible costs of operating your car, van, pickup, or panel truck
for business purposes. For 2001, the standard mileage rate is 34 1/2 cents a mile for all business miles.
If you choose to use the standard mileage rate for a year, you
cannot deduct your actual expenses for that year except for
business-related parking fees and tolls.
Choosing the standard mileage rate.
If you want to use the standard mileage rate for a car or truck you
own, you must choose to use it in the first year the car is available
for use in your business. In later years, you can choose to use either
the standard mileage rate or actual expenses.
If you want to use the standard mileage rate for a car you lease,
you must choose to use it for the entire lease period (including
renewals).
Standard mileage rate not allowed.
You cannot use the standard mileage rate if you:
- Use the car for hire (such as a taxi),
- Operate two or more cars at the same time,
- Claimed a depreciation deduction using ACRS or MACRS in an
earlier year,
- Claimed a section 179 deduction on the car,
- Claimed actual car expenses for a car you leased, or
- Are a rural mail carrier who received a qualified
reimbursement.
Parking fees and tolls.
In addition to using the standard mileage rate, you can deduct any
business-related parking fees and tolls. (Parking fees you pay to park
your car at your place of work are nondeductible commuting expenses.)
Actual expenses.
If you do not choose to use the standard mileage rate, you may be
able to deduct your actual car or truck expenses.
If you qualify to use both methods, figure your deduction both ways
to see which gives you a larger deduction.
Actual car expenses include the costs of the following items.
Depreciation |
Lease payments |
Registration fees |
Garage rent |
Licenses |
Repairs |
Gas |
Oil |
Tires |
Insurance |
Parking fees |
Tolls |
If you use your vehicle for both business and personal purposes,
you must divide your expenses between business and personal use. You
can divide based on the miles driven for each purpose.
Example.
You are the sole proprietor of a flower shop. You drove your van
20,000 miles during the year. 16,000 miles were for delivering flowers
to customers and 4,000 miles were for personal use. You can claim only
80% (16,000 × 20,000) of the cost of operating your van as a
business expense.
More information.
For more information about the rules for claiming car and truck
expenses, see Publication 463,
Travel, Entertainment, Gift, and
Car Expenses.
Reimbursing Your Employees
for Expenses
You generally can deduct the amount you reimburse your employees
for car and truck expenses. The reimbursement you deduct and the
manner in which you deduct it depend in part on whether you reimburse
the expenses under an accountable plan or a nonaccountable plan. For
details, see chapter 13 in Publication 535.
That chapter explains
accountable and nonaccountable plans and tells you whether to report
the reimbursement on your employee's Form W-2, Wage and Tax
Statement.
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