How to Deduct the Cost of a Vehicle Used in Business

Video Transcript

"Oh man, are you driving around as much as I am? With gas prices these days, that's difficult. Do you ever wonder, well how can I deduct the cost of a vehicle, that I'm using for business? Hi, my name is Danielle Loughran. I'm a CPA with Excel, and I'm here to help you with this topic. There's several ways that you can deduct the, either mileage, or the actual card, that you're using for business. The most common and easy way, is probably going ahead and keeping a mileage log, and deducting whatever you drove, for legitimate work purposes. How does that work? From your house to the office, that's not deductible. It's the mileage that you exceed, from once you've already got to the office, so for instance, if you're driving to your office, and then you have to drive to an amusement park to see a client. Wouldn't that be nice? That whole trip from the office to the amusement park and back, is deductible. For the first half of 2008, through July 1st, that deductible rate is at fifty and a half cents, and then, it's up to fifty eight and a half cents, from July, all the way through December. It's important to remember to keep a mileage log. The other method that you can do, to deduct your vehicle for business purposes, is actually capitalizing the vehicle, and then calculating depreciation. The only problem with this, is once you use that method, you do not have the ability to switch over to recording mileage, and I think that one attracts some IRS attention, a little bit more than just having a good, solid mileage log. Again, my name is Danielle Loughran, with Excel, and I hope that I've helped you figure out how to deduct your business mileage."