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Auto Expenses

The “Standard Mileage Rate” allowed by the IRS or your ACTUAL car expenses, including, fuel, repairs, insurance, washes, tires, and auto loan interest or lease payments. If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments that you can deduct.

Deductible auto expenses include the ordinary and necessary costs of all of these:

  • Getting from one workplace to another in the course of your business,
  • Going to visit clients or customers,
  • Going to a business meeting away from your regular workplace, or
  • Getting from your home to a temporary workplace.

When you use your car for business purposes, you ordinarily can deduct car expenses. You generally can use one of the two following methods to figure your deductible expenses.

Here are some things to know about specific situations:

  1. Temporary work location: If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance.If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise.If your employment at a work location is realistically expected to last for more than 1 year of if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary.
  2. No regular place of work: If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside the metropolitan area.You cannot deduct daily driving costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses.
  3. Two places of work: If you work at two places in one day, whether or not for the same employer, you can deduct the expenses of getting from one workplace to the other.
  4. Advertising display on car: Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. If you use this car for commuting or personal uses, you still cannot deduct expenses for those uses.
  5. Hauling tools or instruments: Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car.
  6. Office in the home: If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.

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