Business Use of Car
If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.
Important: You must keep a mileage log to substantiate your usage. This must include the date, place, business purpose and miles driven.
Example: | Odometer | Miles | |||
| Date | Destination | Business Purpose | Start | End | Trip |
| 1/5/xx | Bank of America | Bank Deposit | 8,097 | 8,108 | 11 |
| 1/7/xx | Big Client | Solicit Sale-Bob | 8,108 | 8,137 | 29 |
| 1/8/xx | Post Office | Mail packages | 8,137 | 8,141 | 4 |
You can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction. If you use the standard mileage rate, you can add to your deduction any parking fees and tolls incurred for business purposes.
To use the actual expense method, you must determine what it actually costs to operate the car for the portion of the overall use of the car that is business use. Include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are business miles. You must keep the receipts in addition to keeping the mileage logs.
To use the standard mileage rate, you must own or lease the car; the car must not be used for hire, for example as a taxi; you must not operate five or more cars at the same time, as in a fleet operation; and you must not have claimed a depreciation deduction for the car. You cannot use the standard mileage rate if you are a rural mail carrier who received a "qualified reimbursement".
If you also use your vehicle for personal driving, you must divide your expenses between business and personal use, based on the mileage. For instance, if you drove 20,000 miles during 2009 of which 15,000 miles are business and 5,000 miles are personal than you can deduct 75% of the actual expenses.