Indie authors can deduct the expense of operating and maintaining their car or truck on federal taxes should they use a vehicle to research their books.
Generally, you have the choice of deducting either your actual expenses or a standard mileage rate.
Actual expenses are those costs you incur while researching your book. They can include gas, oil, tire, insurance, registration, licenses, repairs, parking fees, tolls, depreciation, and lease payments.
Should you use your vehicle for personal use as well as for business, you have to divide your expenses between the two. For example, if you drove your vehicle 10,000 miles in a year but only a 1000 miles of that were for researching your book, then you only can deduct 10% of your expenses.
The standard mileage rate is a number announced annually by the IRS. Begin by determining how much of your vehicle’s use was for business purposes. If it was 2000 miles, then you can multiply that number by the standard mileage rate. If that rate were 50 cents a mile, then your deduction is $1000.
Even if you use the standard mileage rate, you still may be able to deduct some business-related expenses, such as interest on your vehicle loan, parking fees, tolls, and various state and local taxes.
If you use the standard mileage rate, you cannot deduct your actual expenses. However, you still may be able to deduct business-¬related parking fees, tolls, interest on your car loan, and certain state and local taxes.
To use the standard mileage rate, you must take that deduction the very first year the vehicle is available for business purposes. For subsequent years, you then can chose to use either the actual expenses or the standard mileage rate. For leased vehicles, however, should you use the standard mileage rate during the first year, then you are stuck with the deduction method so long as you lease the vehicle, including renewals.
Regardless of which method you use, always keep detailed records, such as receipts and printouts of routes taken. If audited, you likely will be asked to provide those records.
My name is Rob Bignell. I’m an affordable, professional editor who runs Inventing Reality Editing Service, which meets the manuscript needs of writers both new and published. I also offer a variety of self-publishing services. During the past decade, I’ve helped more than 300 novelists and nonfiction authors obtain their publishing dreams at reasonable prices. I’m also the author of the 7 Minutes a Day… writing guidebooks, four nonfiction hiking guidebook series, and the literary novel Windmill. Several of my short stories in the literary and science fiction genres also have been published.