Every Mile Counts

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The mileage most of us put on our cars every year--about fifteen thousand--Jennifer Capurro drives in 6 months.

"I go through a tank of gas a day. It's running 30-35 dollars a tank."

As a real estate agent for Prudential Realty, Capurro can easily drive five to six hundred miles in a day, showing clients property throughout Northern Nevada.

"Yesterday my day was to the Northwest, then out to Palomino Valley. Across to Sun Valley and over to Sparks."

While the initial expense at the pump is her responsibility, she's able to save big every year at tax time, thanks to her "independent contractor" status.

"It's a huge write-off at the end of the year. I look forward to that."

According to the I-R-S, there are two ways to take car and gas deductions. The first is the standard per-business-mile allowance. For 2004, it's 37 and a half cents per mile.

The second option is to deduct the actual expenses for your car, including gas, car maintenance and insurance. But not mileage.

Capurro--and many tax experts prefer the first method: "It works out in my favor with the miles that I run to take the mileage."

"The standard deduction is better than the expenses because it gives you--most of the time, the mileage gives you more advantage and a larger return," adds Angie Kilen, an H&R Block tax advisor for the last ten years.

She says if you're going to take car and gas deductions, it's important to have a good bookkeeper or be one yourself...and keep track of all of your expenses.

"Every time you do a trip for your business, keep track of your mileage."

By the way, the mileage you drive from your home to your work can not be deducted when you're filing.