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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 February 2

Car Expenses—Commuting

This Week's LessonWeek of February 9

Car Expenses: Standard Mileage or Actual?

Weekly Lesson

Overview

You may be able to compute the business use of your car using the actual cost method instead of the standard mileage rate. Very few pastors do so because this method is simply too complex and time-consuming. Using the standard mileage rate is much easier. While using the actual cost method takes discipline and perseverance, some studies suggest you will have a higher deduction using this method than the standard mileage rate method, especially if your car is relatively new. The question is whether you consider the potential savings in taxes worth the extra inconvenience.

Actual transportation costs include the cost of local business travel by air, rail, bus, taxi, and the cost of driving and maintaining your car, but not the cost of meals or lodging. You may not deduct the costs of commuting (e.g., by bus, subway, taxi, train, or car) between your home and your main or regular place of work. These costs are nondeductible personal expenses. The most important element of transportation expense is your car. If you are required to use your car in your work, you can deduct the expenses associated with business use of the car. Deductible items include the cost of gas, oil, tires, repairs, tune-ups, batteries, car washes, insurance, depreciation, taxes, licenses, garage rent, parking fees, and tolls.

If you use your car both for business and personal purposes, you must divide your expenses between business and personal use. For example, if you drive your car 20,000 miles during the year (12,000 miles for business and 8,000 miles for personal use) you can claim only 60% (12,000/20,000) of the cost of operating the car as a business expense.

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