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Business Use of Autos
Generally, there are two methods of deducting business use of a vehicle.
Remember that you still need to keep a log of your business mileage. Even if you use the “actual expense” method, you need to have documentation of your business use. Mileage logs provide a method of allocation of expenses between business and personal.
Remember to keep track of tolls, parking, town tax and interest on your auto loan . These are deductible (for the business portion) under either method.
Variations on the methods above include switching from one method to the other. One restriction for switching is that you must have used straight-line depreciation under the “actual expense” method to switch to the “mileage method”.
You can imagine scenarios where one method would be advantageous over the other. The “actual expense” method might provide a greater deduction with a new vehicle when depreciation expense is high. The “mileage method” might prove better for an older vehicle that is reliable and has few repairs.
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