Wednesday, January 17, 2007

Tax Deduction for Business Use of Your Car

If you used your car for business in 2006, you can deduct 44.5 cents per mile on your federal tax return.

If you haven't already, start now to keep a record of your business mileage for 2007. You'll get a deduction of 48.5 cents per mile. Keep a notebook and pen in your car to record business mileage. I keep mine in the storage area next to my seat. Every time I get in my car for business related travel I write down the date, purpose, and distance in my notebook.

On the first page of my notebook I record the mileage reading on my car's odometer for January 1st and December 31st of each year. Although these readings will include all miles driven by my car it is additional proof of mileage.

Business use of car for small business owners include:
  • Driving to the post office to mail catalogs, business literature, and products.
  • Driving to deliver catalogs and products to customers.
  • Driving to fairs, bazaars, trade shows, and other events where you are a vendor.
  • Driving to meet with business associates, such as monthly meetings or recruiting .
  • Driving to give an event or party at a hostess's home.
  • Always keep catalogs and samples in your car. If you leave some at your dentist, beauty salon, doctor, dry cleaners, or specialty store record the mileage in your notebook.
If you are unsure of a particular deduction always consult the IRS regulations ( ) or your tax preparer.

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