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How to repair your auto deduction

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I’m using the flat rate auto deduction for business travel. I had an accident costing me $3,000 out-of-pocket. Can I deduct it? K.U., Burlington, Vt.

A. No. For 2013, the flat rate deduction is 56.5 cents for each business mile traveled, plus any business-related parking fees and tolls. This deduction covers all the costs of operating your vehicle, including repairs, insurance, oil and gas, tires, depreciation, etc.

However, if you qualify, you might start keeping track of your actual expenses from this point on if it will provide a bigger overall de­­duc­­tion than the flat rate deduction. In that case, you may be able to deduct all or part of the $3,000 repair cost.

Tip: Generally, you can switch from using the flat rate method to the actual expense method, but not the other way around.

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