Car and Truck Expenses Hotel de bajo costo VilamouraIf you use your car or truck in your business, you can deduct thecosts of operating and maintaining your vehicle. You can deductexpenses for local transportation and traveling away from homeovernight on business. TaxTip: You may be entitled to a tax credit for an electric vehicle or a deduction from grossincome for a part of the cost of a clean-fuel vehicle that you place in serviceduring the year. The vehicle must meet certain requirements, and youdo not have to use it in your business to qualify for the credit orthe deduction. For more information, see chapter 15 of Publication 535,Business Expenses. Local transportation expenses.Local transportation expenses include the ordinary and necessarycosts of all of the following. Getting from one workplace to another in the course of yourbusiness or profession when you are traveling within the city orgeneral area that is your tax home. Tax home is defined later. Visiting clients or customers. Going to a business meeting away from your regularworkplace. Getting from your home to a temporary workplace when youhave one or more regular places of work. These temporary workplacescan be either within the area of your tax home or outside thatarea. Local business transportation does not includeexpenses you have while traveling away from home overnight. Thoseexpenses are deductible as travel expenses and are discussed laterunder Travel, Meals, and Entertainment. However, if you useyour car while traveling away from home overnight, use the rules inthis section to figure your car expense deduction. Generally, your tax home is your regular place of business,regardless of where you maintain your family home. It includes theentire city or general area in which your business or work is located. Example.You operate a printing business out of rented office space. You useyour van to deliver completed jobs to your customers. You can deductthe cost of round-trip transportation between your customers and yourprint shop. Caution: You cannot deduct the costs of driving your car or truckbetween your home and your main or regular workplace. These costs arepersonal commuting expenses. Office in the home.Your workplace can be your home if you have an office in your homethat qualifies as your principal place of business. SeeBusiness Use of Your Home, later. Example.You are a graphics designer. You operate your business out of yourhome. Your home qualifies as your principal place of business. Youoccasionally have to drive to your clients to deliver your completedwork. You can deduct the cost of the round-trip transportation betweenyour home and your clients. Methods for DeductingCar and Truck Expenses For local transportation or overnight travel by car or truck, yougenerally can use one of the following methods to figure yourexpenses. Standard mileage rate. Actual expenses. Standard mileage rate.You may be able to use the standard mileage rate to figure thedeductible costs of operating your car, van, pickup, or panel truckfor business purposes. For 1999, the standard mileage rate is 32 1/2 cents a mile for all business miles driven before April1. The rate is 31 cents a mile after March 31. Caution: If you choose to use the standard mileage rate for a year, youcannot deduct your actual expenses for that year except forbusiness-related parking fees and tolls. Choosing the standard mileage rate.If you want to use the standard mileage rate for a car or truck youown, you must choose to use it in the first year the car is availablefor use in your business. In later years, you can choose to use eitherthe standard mileage rate or actual expenses. If you want to use the standard mileage rate for a car you lease,you must choose to use it for the entire lease period. For leases thatbegan on or before December 31, 1997, the standard mileage rate mustbe used for the entire portion of the lease period (includingrenewals) that is after that date. Standard mileage rate not allowed.You cannot use the standard mileage rate if you: Use the car for hire (such as a taxi), or Operate two or more cars at the same time. luxury hotels in RiminiParking fees and tolls.In addition to using the standard mileage rate, you can deduct anybusiness-related parking fees and tolls. (Parking fees that you pay topark your car at your place of work are nondeductible commutingexpenses.) Actual expenses.If you do not choose to use the standard mileage rate, you may beable to deduct your actual car or truck expenses. TaxTip: If you qualify to use both methods, figure your deduction both waysto see which gives you a larger deduction. Actual car expenses include the costs of the following items. Depreciation Lease payments Registration fees Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls If you use your vehicle for both business and personal purposes,you must divide your expenses between business and personal use. Youcan divide based on the miles driven for each purpose. Example.You are the sole proprietor of a flower shop. You drove your van20,000 miles during the year. 16,000 miles were for delivering flowersto customers and 4,000 miles were for personal use. You can claim only80% (16,000 20,000) of the cost of operating your van as abusiness expense. More information.For more information about the rules for claiming car and truckexpenses, see Publication 463,Travel, Entertainment, Gift, andCar Expenses. Reimbursing Your Employeesfor Expenses You generally can deduct the amount you reimburse your employeesfor car and truck expenses. The reimbursement you deduct and themanner in which you deduct it depend in part on whether you reimbursethe expenses under an accountable plan or a nonaccountable plan. Fordetails, see chapter 16 in Publication 535,Business Expenses.That chapter explains accountable and nonaccountable plans andtells you whether to report the reimbursement on your employee's FormW-2, Wage and Tax Statement.