Vehicle Business Deductions

Written by Stevens Group September 12, 2017

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Vehicles—Business Use Under certain circumstances a taxpayer can claim a deduction for using their vehicle for business purposes. If you use your car for business purposes, you ordinarily can deduct car expenses using either the standard mileage rate or actual expenses.
Use of a vehicle qualifies as business use under all of the following.

  • Getting from one workplace to another in the course of a taxpayer’s business or profession when the taxpayer is traveling within the city or general area that is the taxpayer’s tax home.
  • Going to a business meeting away from the taxpayer’s regular workplace.
  • Getting from home to a temporary workplace when the taxpayer has one or more regular places of work.
    These temporary workplaces can be either within the area of the taxpayer’s tax home or outside that area. Temporary Work Location A temporary work location is a work location that is realistically expected to last, and does in fact last, for one year or less.
    Commuting from home to a temporary work location is deductible only if the taxpayer has one or more regular work locations, or the temporary work location is outside the taxpayer’s tax home area.
    It is important to keep complete records to substantiate items reported on a tax return. In the case of car and truck expenses, the types of records required depend on whether the taxpayer claims the standard mileage rate or actual expenses.
    To claim the standard mileage rate, appropriate records would include documentation identifying the vehicle and proving ownership or a lease and a daily log showing miles traveled, destination and business purpose.
    For actual expenses, a mileage log helps establish business use percentage. Taxpayers should also retain receipts, invoices and other documentation to show cost and establish the identity of the vehicle for which the expense was incurred. For depreciation purposes they need to show the original cost of the vehicle and any improvements as well as the date it was placed in service.

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