Exploring the Universe

For tax purposes, car expenses are divided between local (called transportation) and travel (when away from home). I am discussing transportation this time.

Business Mileage:

Unless you meet the qualifications for office-in-the-home, you cannot claim mileage expenses from your home to the first business place.  I will discuss this later.

Therefore, let’s say you are going to the post office to send off a manuscript or two, then you go to a store to buy paper and toner for your printer, some tablets/notebook paper, pens, paper clips, staples, etc., before going home. And you do not qualify for or claim office-in-the-home expenses on your tax return.

You can claim business mileage between the post office and the store. Period.

If you drive to the post office and return home, you cannot claim any business mileage.

The mileage between your home and the post office and between the store and your home is considered commuting, which is a personal expense.

If you qualify for office-in-the-home, you may claim all business related miles – from home to post office to store to home.

Two Methods:

If you do have business mileage for 2011, you may use either the standard mileage rate (51 cents per mile) or the business percentage of actual expenses and depreciation.

Actual expenses includes everything you spend on your vehicle – gas, oil changes, new tires, taxes, garage/parking, tags – everything. You can also claim depreciation on your vehicle (to be discussed later). However, you may only claim the business percentage of these expenses. If your business mileage is 4,000 miles and your total mileage is 10,000 miles, you may claim business percentage of 40%.

In order to claim depreciation on your vehicle, you must not have claimed standard mileage rate for the same vehicle in a previous year.

Regardless of which method you use, you can claim toll fees and parking costs in full if they are business related.

Record Keeping:

If you are ever audited, you will need a way to prove the business mileage claimed. This usually means either a tablet or calendar where you record your beginning and ending odometer readings for each trip and why you made the trip. If you make the same trip several times and know exactly the mileage, you can skip the odometer readings after the first one.

Regardless of which method you select, you must keep records showing business mileage and total mileage for the year so you can determine business percentage.

IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses

Any questions?

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Comments on: "Tax Facts: What Car Expenses Can A Writer Claim?" (2)

  1. Ugh, as a self employed–insert which ever title works over the last 20 years–I hate taxes! Of which mileage is by far the worst to keep track of!

    Thanks for the great tips on how to make tax time easier for freelance writers.

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