If you use your vehicle for business purposes, you may be able to recover some of the money you spend on that travel when you file your income taxes. But even though the IRS allows you to use your vehicle expenses to offset any taxes due, it is still important to keep meticulous records when claiming your vehicle on your taxes. Keeping accurate and up-to-date records will make tax filing easier and provide the backup you need in the event of an audit.
Keep a mileage log in your glove box, and use that mileage log every time you use your car for business-related purposes. A small notebook that can be kept in your glove box is perfect for this purpose.
Record each reimbursement payment you receive from your employer. If you submit an expense report and are reimbursed by your employer for your mileage and your expenses, that mileage cannot be claimed on your taxes.
Keep a log of all of your vehicle-related expenses during the year, from gasoline purchases and oil changes to repairs and tune-ups. This will make it easier to determine how much it really costs to use your vehicle.
Check the IRS website for the current vehicle mileage allowance. The money you can claim per mile driven changes periodically according to a formula that takes into account things like the price of gas and the cost of vehicle maintenance.
Download the forms you need from the IRS website, or use a tax preparation software package to complete your taxes and figure your vehicle allowance. Be sure to double-check your figures before filing your taxes.
Decide which method you want to use to claim your vehicle expenses. There are two ways to claim vehicle expenses--standard and actual. The standard method is much easier, since it uses a standard amount per mile, but drivers still need to keep detailed log books to back up the business miles claimed. With the actual method, drivers need to keep detailed records of every vehicle-related expense, and then use the percentage of business versus personal use to figure the amount of the permitted deduction.