J.K. Lasser's Your Income Tax 2015: For Preparing Your 2014 Tax Return

Chapter 43Deducting Car and Truck Expenses

The costs of buying and operating a car, truck, or van for business are deductible under rules hedged with restrictions. Depreciation deductions for most cars, trucks, and vans are subject to annual ceilings. For new cars placed in service in 2014 that are used over 50% for business, the first-year depreciation limit is $3,160 plus a bonus allowance if this rule is extended (43.4). For most new light trucks and vans, the 2014 limit is $3,460, with an additional bonus allowance if the bonus depreciation rule is extended (43.4). The annual limits are reduced for personal use. If a vehicle placed in service in 2014 is used 50% or less for business, depreciation must be based on the straight-line method and the maximum deduction is reduced by personal use (43.4).

To avoid accounting for actual vehicle expenses and depreciation, you may claim an IRS mileage allowance. The allowance for 2014 is 56¢ per mile. Keep a record of business trip mileage.

If you are self-employed, you deduct your vehicle expenses on Schedule C or Schedule C-EZ if eligible (40.6). Use Form 4562 to compute depreciation if you claim actual operating costs instead of the IRS mileage allowance. If you are an employee, use Form 2106 to claim unreimbursed vehicle expenses, which are deductible only to the extent that together with other miscellaneous itemized deductions they exceed 2% of your adjusted gross income.

If you bought an electric vehicle in 2014 for business ...