Auto Use Records

Time is winding down for you to be able to start creating a log for your auto use if you are going to claim it on your tax return. This may be the biggest tax break of them all. Who wouldn't want to get a $5K to $6K tax break. And it is a simple thing to do.

The IRS requires that you keep a log for no less than 90 days and you will get the tax deduction for the entire year.

For the next 90 days just keep track of you auto use for Biz purposes. These are the 4 things to keep track of:


Date / Destination / Primary Purpose / Miles

You can get the 2009 Vehicle Use Log by visiting www.HomeBusinessTaxSavings.com and click on the Free Downloads under the Resourse Center tab.

Destination does not have to be exact. For example, you could simply put Joe's Cafe'. You do not need the address of the Cafe'.

Primary Purpose is simply why you are going there. Miles are just that. How far away is it. If you went 12 miles, then 12 miles is what you write down.

You can get $550 for every 1,000 miles you drive. That is like getting $200 in tax deductions for every tank of gas you buy for you car.

So over the past year, if you put 10,000 miles on your car for business use, adn you kept track of it, you qualify for $5,500 in tax deductions.

Often there are ways to include errends and shopping miles too.

Here is an example how that works. With a little planning this can be of great benefits.

Let's say you have to get groceries, pay a few bills but you also have to go to the post office box to get your business mail and the copy shop to print business flyers and fax a proposal.

If you do that all that in one trip, all the miles you just racked up become business miles. On your log you put the date, the destination is the furthest business destination, say the Post Office or Copy Store. Primary purpose is what ever you did at the post office or copy shop. Total miles is what you racked up when you pull back into your driveway.

The fact that you also did grocery shopping and some other errond is secondary. The Secondary Purpose is not required to be logged. The Federal Tax Courts have given the taxpayer the right to determine what is Primary.

If you made two seperate trips, you put all those miles on your car and can only claim about half of your driving. By combining what you do, you get 100% of your miles deducted.

Each time you need to go somewhere, think of what business errand you could accomplish while you are gone. Sometimes you will not have any business to take care of but sometimes you will and that could wind up being a significant tax savings for you.

Two methods of figuring the Tax deductions for you Vehicle.

The standard method - the one above and the Actual Operating Cost method. (AOC)

The AOC method requires you to keep records all year long but may give you an even higher deduction. This takes into account the tires you buy, battery you needed to replace, depriciation and repairs of you vehicle.

Does this seem to be a lot to keep track of. It doesn't have to be a bother. Here is how you can simplify it for next year.

#1 Use a credit card with a zero balance and use this one card for only and all things related to the operation of the vehicle. This also includes car payments for owning or leasing.

#2 Write checks for anything you can not put on the card that relates to the vehicle expense. You will need to write down the check number, date, payee, amount and reason for the check on a ledger or some thing you use for your record keeping. Keep a running total.

#3 Cash payments. There will always be instances that you need to pay cash such as toll payments. Be sure to jot these down in the ledger also. Keep a running total.

At the end of the year, total up your 12 months of credit card statements, the total from you check ledge and the total from your cash ledger. Once all 3 are combined, you have your yearly total for vehicle expenses.