The IRS recently announced an increase in the standard mileage rate for the second half of 2011. (IRS Announcement 2011-40) So taxpayers might discard all the additional records required to deduct actual driving expenses for a new vehicle and go with the IRS-approved shortcut.
Strategy: Crunch the numbers first. The extra record-keeping rules could pay off in bigger travel deductions at tax return time.
The actual expense method may be especially beneficial this year due to the 100% bonus depreciation tax break for new vehicles used more than 50% for business.
Here’s the whole story: If a taxpayer uses a vehicle for business driving, he or she may deduct out-of-pocket expenditure—including gas, oil, repairs, insurance, registration fees, tires, etc.—attributable to the business use of the vehicle, plus a depreciation allowance based on the percentage of business use. Although depreciation deductions are usually limited by...(register to read more)