Remember, when you use the standard mileage rate method for
deducting auto expenses for your business use, you cannot
deduct any other expenses related to your automobiles such
as insurance, repairs, etc. An
exception is the business portion of interest paid on your
auto loan. For
example, if you use your vehicle 60% for business and you
paid $525 in interest on your auto loan for the year, you
can deduct $315 ($525 x .60 = $315) in addition to your
mileage deduction.
Parking and tolls are also separate deductions from the
standard mileage rate.
New Real Estate Deduction for 2008
New for 2008 is a $1,000 extra standard deduction for real
estate taxes for those who do not itemize their deductions.
If you normally take the standard deduction and also pay
some property taxes, be sure to tell your tax return
preparer about the real estate taxes you paid.
State Income Tax Deduction or Sales Tax Deduction?
If you have itemized deductions, you may deduct either state
sales taxes paid by you or the amount of state income tax
you paid.
In states that have no income tax, obviously you would take
the sales tax deduction.
IRS provides tables to determine your sales tax deduction. The
amount of sales tax you can deduct is dependent on your
income and where you live. Sales
tax paid on vehicles, boats, aircraft and other IRS
specified items (usually high dollar items) is added to the
amounts allowed in the tables mentioned above.
For those of you who live in states with state income tax,
it’s a good idea to give all information that your tax
return preparer will need to determine whether you should
deduct state income tax or state sales tax.
Joe
Learn more about
Joe DePetris, Jr., and IBO tax return preparation
and tax issues at
IBO Bookkeeping 101.
Find more
Tax Tips for IBOs from Joe DePetris, Jr., CPA.
This article is provided as an
educational resource for your guidance, and is
strictly informational. It does not constitute
legal, accounting, or other professional
counsel. Nothing included herein implies a
recommendation by the author, the
IBOA International, or
Amway Global, of any course or method of
regulatory compliance. Readers and users who
intend to take, or refrain from taking, any
action based on information contained herein
should first consult with their qualified tax
advisor, preferably a C.P.A., or appropriate
regulatory authorities.
