NEW YORK (MainStreet) — You have two options for claiming a deduction for using your car for business. The simplest way is to use the "standard mileage allowance", which is 56.5 cents per mile for 2013. This rate applies no matter where in the United States you drive, and no matter what type, model or make of car you drive. It is available for both a car that you own and a car that you lease.

In addition to the standard mileage allowance you can deduct any business-related parking fees and tolls. A self-employed individual can also deduct the business portion of any auto loan interest and state and local personal property taxes on Schedule C. Employees cannot deduct the business portion of auto loan interest, but they can deduct qualifying state and local personal property taxes as a tax on Schedule A.

You can also elect to claim the "business use percentage" (business miles divided by total miles driven for the year) of the total cost of maintaining your car, which include -

  • auto club membership
  • depreciation
  • gas and ail
  • insurance
  • license and registration
  • lease payments
  • repair and maintenance
  • tires
  • wash and wax

Generally to be able to claim the standard mileage allowance you must elect to do so in the first year the car is placed in service (the year you purchased the car, or the first year you used the car for business). If you claim the standard mileage rate in the first year you can switch to actual expenses in a later year. But if you claim actual expenses in the first year you may not be able to change over to the standard mileage allowance in later years. If you choose to claim the standard mileage allowance on a leased car you must use it for the entire period of the lease.

--Written by Robert D. Flach for MainStreet