Posted on December 28, 2005 at 16:48:51:
If you use your automobile for business, you need to keep careful records of its use to maximize your deductions for that use.
The easiest way to do this is with the standard mileage rate, which has been increased this year to 40.5 cents per mile (48.5 cents per mile after August 31st). Keep an auto log in your car so you can note where you went on business and how many miles you drove; note parking fees and tolls too. Some people use the same log to note mileage for medical and charitable reasons, too. This is also deductible, though at a lower rate.
The actual expense method may provide larger deductions, but not as much as previously, since depreciation deductions have been cut, especially for more expensive cars. This method requires that you note all expenses, from purchase, registration, and insurance to all maintenance and each gallon of gas used. Unless the car is 100 percent for business, the totals must be divided into business and nonbusiness use of the vehicle.
Drive carefully – and have a happy new year. Best wishes for a healthy and prosperous 2006.