If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.
You can generally figure the amount of your deductible car expense using one of two methods: th...e standard mileage rate method or the actual expense method. If you qualify to use both methods, before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction. If you use the standard mileage rate, you can add to your deduction any parking fees and tolls incurred for business purposes.
To use the standard mileage rate, you must own or lease the car and:
-You must not operate five or more cars at the same time, as in a fleet operation,
-You must not have claimed a depreciation deduction for the car using any method other than straight-line,
-You must not have claimed a Section 179 deduction on the car,
-You must not have claimed the special depreciation allowance on the car,
-You must not have claimed actual expenses after 1997 for a car you leased, and
-You cannot be a rural mail carrier who received a "qualified reimbursement."
Further, to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses.
However, for a car you lease, if you choose the standard mileage rate, you must use the standard mileage rate method for the entire lease period (including renewals).
To use the actual expense method, you must determine what it actually costs to operate the car for the portion of the overall use of the car that is business use. Include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are business miles.
Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expenses.