Accounting Focus, Inc

For more information, please go to the IRS webpage provided under Links.

If you use your car for business only, you may deduct all operating expenses.

If you use your car for both business and personal purposes, you may deduct only the costs related to its business use.

It is very important to diligently track your personal and business miles in order to establish to what % you use your car

for business purposes.

It is also necessary to substantiate all car related expenses through receipts.

There are two methods to determine your deductible car expense:

the standard mileage rate (SMR) method, or the actual expense method.

If you qualify to use both methods, you may want to figure your deduction both ways to see which one gives you a larger deduction.  

What is included in the deduction? 

The actual expense method includes gas, oil, repairs, tires, insurance, registration fees, license fees, garage rental, depreciation (or lease payments).  

The SMR method includes all of the above expenses in the rate per mile set by the IRS. All business miles for the year are multiplied by this rate to determine the total deduction.

In addition, parking fees and tolls incurred for business purposes are  deductible under both methods.

To qualify for the SMR method:

You must own or lease the car.

You must not have claimed accelerated depreciation or Section 179 expense on this car in prior years.

You must not have claimed actual expenses for this car in prior years.

To use the SMR method, you must use it in the first year you use the car for business. You can switch to the actual expense method thereafter. For leased cars, the same method must be used for the entire lease period.

Independent Contractors

When you contract to have work done, you you must prepare Form 1099-MISC to report payments over $ 600 to any one individual. This form must generally be provided to the contractor by January 31 and to the IRS by the end of February of the following year.

Form 1099-MISC must also be issued for legal fees.

State of Georgia Annual Registration