Tax Relief from Soaring Gas Prices
2005 - Businesses can mitigate the impact of soaring gas prices
in the aftermath of hurricanes Katrina and Rita by taking
the maximum allowable car deductions on 2005 tax returns.
to the IRC, a taxpayer who uses his car for business or
employment purposes can deduct car expenses, including upkeep,
repair, and gas, for the operation of his business or employment.
Traveling from one location to another when the taxpayer
has one or more regular places of business;
clients or customers;
and entertainment expenses; and
to a business meeting away from the regular workplace.
deductible expenses is generally done by one of two methods:
Standard mileage rate. For 2005, the IRS set this at 40.5
cents per mile, but in September the IRS increased the
rate to 48.5 cents a mile for all business miles driven
between September 1 and December 31, 2005.
car expenses. This includes gas and oil; cleaning, inside
and out; waxing; insurance; depreciation; and repairs
of the current price of gasoline, actual expenses may exceed
the standard mileage rate, depending on the vehicle and
distances driven and how much gas is purchased. Taxpayers
should calculate each and determine which is most advantageous.
of which deductible is used, taxpayers should keep an accurate
written log of travel activities, costs, and expenses, and
purchase gas and pay for repairs with a check or credit
card that provides a document trail to describe and substantiate
the valid purposes for travel. The taxpayer should save
all receipts and properly itemize the expenses and deductions
carefully on tax forms.
Omar, a tax and financial educator in Monmouth County,
N.J., is the author of Straight Talk About Small Business
Success in New Jersey. He can be reached at email@example.com