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Squeeze more tax mileage out of auto expenses

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in Small Business Tax,Small Business Tax Deduction Strategies

Small Business Tax Strategies receives several related inquiries and comments on this particular tax issue every year: Should you use the flat rate method for deducting business auto expenses or the actual cost method? The answer depends on your personal situation.

Strategy: Do the math. But don’t be surprised if the extra record-keeping required for deducting your actual expenses provides a much bigger deduction—even if you switch to the actual expense method partway through the year. This can provide a five-digit depreciation deduction for some vehicles.

The actual expense method may be especially beneficial in 2013 due to the restoration of the 50% “bonus depreciation” tax break for vehicles placed in service this year.

Here’s the whole story: When you use a vehicle for business driving, you may deduct out-of-pocket expenditures—such as gas, oil, repairs, insurance, registration fees, tires, etc.—attributable to the busin...(register to read more)

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