Even if

you use the standard mileage method, you still can deduct the business

portion of tolls and parking fees. But if you overstay your welcome at

a parking meter, don't look for Uncle Sam to pay the fee. Fines for all

traffic violations, including parking violations, are not deductible

under either method.

There is no

easy way to determine which method will produce the greater tax benefit

for you. Many factors can impact your decision, including the number of

miles you drive each year, the type of vehicle you drive, and your willingness

to keep detailed records.

As with other

business expenses, CPAs say good record keeping is the key to maximizing

your tax savings. In fact, regardless of the method you choose, the amount

of your deduction depends, to a large extent, on how good you are at saving

receipts, keeping mileage records, and jotting down your costs throughout

the year.

The way you

report business use of your car depends on whether you are self-employed

or an employee.

Self-employed

taxpayers report transportation expenses on Schedule C, where they are

fully deductible. Employees, on the other hand, must complete Form 2106,

Employee Business Expenses , to deduct automobile expenses. Employees

may claim unreimbursed transportation expenses as miscellaneous itemized

deductions which are deductible to the extent that they exceed two percent

of adjusted gross income.

Although the

fine print concerning the auto expense deduction can be tricky and the

record keeping cumbersome, you can save valuable tax dollars by claiming

qualified expenses. Ideally, each year, you or your CPA should compute

your deduction under both methods and compare the results to determine

which alternative gives you the largest deduction for that particular

year.

The GSCPA is

the premier professional organization for CPAs in the state of Georgia.

With over 10,000 members throughout the state, the purpose of the GSCPA

is to promote the study of accountancy and applicable laws, provide continuing

professional education, maintain high ethical and work standards, and

provide information about accounting issues to the membership and the

public. For more information, access our web site at www.gscpa.org.

Back

to Business Home Page