Mileage or Actual expenses can get complicated very quickly with lots of variables. There are some ‘common themes,’ or some general rules or guidelines that can be a starting point for a strategic decision.
These ‘Rules of Thumb’ often point a client in the right direction while shopping for a car, truck, or SUV. Then, a brief consultation before or after the purchase allows us to craft the best strategy to meet their particular circumstance and set of facts.
These are the 7 rules:
- Rule #1 – If you put on A LOT of business miles, and the car is generally at a lower purchase cost, then the Mileage Method will win.
- Rule #2 – If you don’t travel for business often, a vehicle used primarily for business can be depreciated using the Actual Method.
- Rule #3 – If you’re not going to have a lot of business miles, leasing a car for business use is the better economic decision.
- Rule #4 – If you have a low-cost vehicle used primarily or exclusively for business, the Actual Method is better than the miles method.
- Rule #5 – If you use your car part-time for business because you have a day job, you will typically use the Mileage Method.
- Rule #6 – If you buy a large SUV or truck, you will generally lean towards the Actual Method because you will have a lower MPG or miles per gallon
pushing up your actual costs.
- Rule #7 –If you have a high MPG, or miles per gallon
you will lean towards the Mileage Method because your operating costs will generally be lower.
Let’s figure out the best strategy for you. Schedule Your Free Tax Assessment Here.