For businesspeople who travel by car, any change in the per-mile driving rate by the Internal Revenue Service makes a difference. Effective April 1, the 1999 national per-mile driving rate will decrease from 32.5 cents to 31 cents. The new rate is the standard amount taxpayers can deduct for automobile expenses on 1999 tax returns for business miles driven.
According to Larry Snyder, automotive cost expert at Runzheimer International, which developed the standard for the IRS, “Lower gasoline prices are one reason for the decrease. Also, 1999 model vehicle prices remained stable or dropped, causing projected [automobile] depreciation costs to moderate.”
Instead of using the IRS’ standard rate, taxpayers can record actual business driving costs to deduct automobile expenses. “The standard may be better for some people. It depends on how much you drive and the age of your car,” says Robert DeLellis, owner of DeLellis Accountancy Corp. in Camarillo, California. Also, if you’re self-employed and qualify for a home office, all business miles are deductible. “If you’re a salesperson who works mostly outside your home or office, the first trip out and the last back don’t count,” says DeLellis. Either way, keep a log to substantiate your expenditures.
Lauren Coleman, owner of Los Angeles-based Punch Media, a multimedia communications company, tracks all of her car trips. “I log every time I drive for a business reason, whether i’m picking up office supplies or taking a client out to lunch.” Coleman logs about 3,000 miles annually, about 80% of which is for business.
These tax benefits aren’t only for automobile owners-those who lease cars and drive them for business can also deduct the mileage.