Continuing education for ministry leaders
Weekly Lessons, created and written by Richard R. Hammar, J.D., LL.M., CPA, give you a basic legal overview of essential topics based on staff or volunteer positions within a church.

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Week of January 12

Car Expenses—Commuting

This Week's LessonWeek of January 5

Car Expenses: Standard Mileage or Actual?
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Our lesson this week examines the topic of car expenses. The Executive Summary provides a concise review of the key points. Before we get started, test your knowledge by completing the following quiz.

Pastor B drives his car several thousand miles each year for business purposes. He has been using the standard mileage rate to compute his car expenses (multiplying his substantiated business miles times the IRS standard mileage rate). However, he has heard that he can also compute his car expenses using the "actual expense" method. Under this method, Pastor B calculates the actual expenses he incurs in operating his car for business, instead of claiming the standard mileage rate. How does Pastor B compute the actual expenses of using his car for business, assuming that he uses his car for both business and personal purposes? This is the subject of this week's lesson. While some studies have suggested that business expenses will be higher using the actual expense method instead of the standard mileage rate, for most pastors the work that is required to keep track of actual expenses is not worth a possibly higher deduction.

Weekly Quiz

Instructions Click on the correct answer for each of the following questions.

Executive Summary

You can use the "actual cost method" to compute transportation expenses associated with the business use of your car. However, as this week's lesson demonstrates, doing so is too complicated for most taxpayers. Most prefer the simplicity of using the standard business mileage rate to compute their car expenses.

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