Contributed by: WrenD, FreeTaxUSA Agent, Tax Pro
For vehicle expenses from personal use vehicles, the IRS requires you to document the actual amount of vehicle expenses (fuel, maintenance, licensing fees, car interest, lease payment, insurance, etc.) and the miles driven that are strictly related to the business in a mileage log.
In the mileage log you record where each trip in the car started, where the trip ended, and the business purpose for driving the vehicle between the two places. Mileage from one business related work site to another business work site are includible as business miles.
Miles from a personal location or home to a business-related work site are considered nondeductible commuting miles.
The beginning and ending odometer reading should also be recorded so that you know the total miles driven (including personal miles) throughout the year.
Business owners can either
1) Deduct the business-use percentage of vehicle expenses actually paid.
2) Deduct an amount equal to the IRS standard mileage rate multiplied by the total business miles recorded in the mileage log.
