Class: Federal Taxes for Individuals

TAX TREATMENT FOR CAR EXPENSES

SCENERY: Carol is self-employed as a professional nurse. It does not have an office, it provides its services in hospitals, rehabilitation centers and in patient residences. To go to his work appointments, he bought a car at a cost of $58,000. She keeps records of car expenses for work purposes. During the year 2022 he used the car for 18,000 miles (12,000 work and 6,000 personal).

His annual expenses were as follows:

Gasoline ................................... $3,500

Repairs and maintenance ....... 1,200

Insurance .................................... 2,500

Tablets .................................. 120

Tolls and "parking" .................... 350

Interest on car loan ........ 2,000

Depreciation ................................ 500

INSTRUCTIONS:

a. Option 1: Using the standard mileage rate, determine the expense allowed by law that you can claim on the return.

b. Option 2: Actual expenses, use the following formula to determine the allowable expense

Total miles for business purposes / Total miles for the year = Deductible portion of expenses

The deductible portion is applied to expenses