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If you use your car for business purposes, you may be able to deduct car expenses. You generally can use one of the two following methods to figure your deductible expenses.

  • Standard mileage rate
  • Actual car expenses

Per IRS Publication 463 Travel, Entertainment, Gift and Car Expenses, page 15:

Actual Car Expenses

If you don't use the standard mileage rate, you may be able to deduct your actual car expenses.

TIP. If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction.

Note. This is done for you in the TaxAct® program if you enter all of the information requested in the Federal Q&A interview.

Actual car expenses include:

  • Depreciation
  • Lease Payments
  • Registration Fees
  • Licenses
  • Gas
  • Insurance
  • Repairs
  • Oil
  • Garage rent
  • Tires
  • Tolls
  • Parking fees

If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Continue to keep records, as explained later in chapter 5.

Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.

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