In 2018, Eileen, a self-employed nurse, drives her car 20,000 miles, of which 12,000 miles pertain to business. Expenses concerning the car include the following:
?
$$\begin{array} { l r }
\text { Gas and oil } & \$ 5,720 \
\text { Auto license tag } & 90 \
\text { Insurance } & 900 \
\text { Repairs } & 700 \
\text { Tires } & 400 \
\text { Parking during business use } & 300 \
\text { Tolls during business use } & 150 \
\text { Depreciation } & 2,960
\end{array}$$
Assuming Eileen purchases the car in 2018 and she wants to use the most advantageous method to determine her 2018 deduction for automobile expense, what amount can Eileen deduct as auto expenses?

Question

In 2018, Eileen, a self-employed nurse, drives her car 20,000 miles, of which 12,000 miles pertain to business. Expenses concerning the car include the following:
?
$$\begin{array} { l r } 
\text { Gas and oil } & \$ 5,720 \
\text { Auto license tag } & 90 \
\text { Insurance } & 900 \
\text { Repairs } & 700 \
\text { Tires } & 400 \
\text { Parking during business use } & 300 \
\text { Tolls during business use } & 150 \
\text { Depreciation } & 2,960
\end{array}$$
Assuming Eileen purchases the car in 2018 and she wants to use the most advantageous method to determine her 2018 deduction for automobile expense, what amount can Eileen deduct as auto expenses?

Quizplus · Accepted Answer

Eileen can choose between the standard mileage rate and actual expenses method for her car expense deduction. The standard mileage rate for 2018 is 54.5 cents per mile. For business miles, this amounts to $12,000 \times 0.545 = \$6,540$. The actual expenses method includes all car expenses prorated by the business use percentage ($12,000 / 20,000 = 60\%$). The total expenses are $\$5,720 + \$90 + \$900 + \$700 + \$400 + \$300 + \$150 + \$2,960 = \$11,220$. 60% of \$11,220 is \$6,732. However, parking and tolls for business use are fully deductible, adding \$450 (\$300 + \$150) to the standard mileage rate total, resulting in \$6,540 + \$450 = \$6,990. Therefore, the most advantageous method is the actual expenses method, yielding a deduction of \$6,990.

In 2018, Eileen, a Self-Employed Nurse, Drives Her Car 20,000