Your car expenses and public transportation can be tax deductible under the following situations:
1. Medical purposes
2. Charitable purposes
3. Employment relocation
4. Trade or Business purposes
Taxpayers are allowed to deduct car expenses if the car is used as transportation for medical care. Taxpayers can deduct either the actual car expenses or a standard mileage rate, which is 20 cents per mile in 2006. Medical expenses are an itemized deduction.
Taxpayers are allowed to deduct car expenses if the car is used for charitable purposes. The car expenses are claimed as part of the charitable donation deduction, which is an itemized deduction. The standard mileage rate for charitable purposes for 2006 is 14 cents per mile.
Taxpayers are allowed to deduct car expenses if the car was used to move the taxpayer to a new place of employment at least 50 miles from your previous place of employment (other rules may be required). This deduction is part of the moving deduction. The standard mileage rate for moving purposes is 20 cents per miles.
Taxpayers are allowed to deduct car expenses and public transportation when used for trade or business purposes. The standard mileage allowance for 2006 is 48.5 cents per mile. The IRS divides mileage into three categories: 1) business; 2) commuting; and 3) personal. Ordinary commuting and personal trips are nondeductible. Trips from home to your first business stop and trips from your last business stop to home are considered personal miles. Daily trips to the bank, post office, and similar stops where you perform no service are not deductible. Travel between temporary business stops is deductible.
If you are using the standard mileage rate, in addition to that amount you are allowed to deduct parking, tolls and your business use percentage of the interest on your car loan and any state or local property taxes paid on your vehicle. If you instead wish to deduct your actual expenses you are allowed to take your business use percentage of your vehicle’s depreciation, interest, insurance, gasoline, oil, car washes, tires, maintenance, repairs. licenses, tags, personal property tax, parking and tolls.