As we all know, it’s that dreaded time of the year-Tax time! In honor of tax season, I have a new series called “Ask An Accountant”. Send in your tax questions and each week to firstname.lastname@example.org and I will post the question and give an answer from an experienced accountant.
I am a social worker and my job requires my personal car and cell phone for work use. I track my mileage and keep all gas receipts; can I claim my car (gas and maintenancen) and my cell phone on my taxes?
This question is best divided into 2 separate questions so I will answer it like this:
1. Can I deduct car/auto expenses if I am required to use my personal auto for business.
2. Can I deduct the use of a cellphone used for work.
1. For an auto deduction, you may choose between depreciation (deducting the cost of the car over a predetermined useful life (5 years for autos) and the actual exenses (gas, oil, repairs) or mileage. The depreciation method will still require the recording of mileage, as the business vs. personal mileage will be used to determine the % of the depreciation you will be able to deduct.
The mileage method requires a log of business mileage but keep in mind commuting mileage (from your home to regular place of business/office) cannot be used, but from the workplace to a secondary workplace or client can be deducted. The mileage rate for 2010 is 50 cents per mile. These expenses are reported on Form 2106 and will be deducted an Schedule A of your tax return.
I recommend keeping a log for business vs. personal mileage in both situations above.
2. Business use of a cell phone is also reported on Form 2106 and deducted on Schedule A. The business use % must be calculated based on Personal vs. Business use of the phone and apply that % to the cost of the cell phone bills from Jan 1 to Dec 31. The IRS used to require a log for business deduction of cell phone, but has recently changed that rule, and no log is required. I would recommend some type of substantiation, such as noting business calls on an actual cell phone bill in the event you are audited.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.
photo credit: austinpost.org
Filed under: Ask an Accountant, Thoughts