15 Apr Old Reliable: Your Car and You
This articles was first published in February, 2012. It is just as timely now as it was then. Hope you find some information to help you with your taxes this year. After all, we are supposed to be filing our taxes today!
The following does not pretend to be a compilation of dos and don’ts about either car maintenance or tax deductions. I am hoping to provide some pointers and the means to find more information, especially about taxes.
I have a shameful confession to make. I never owned a car until I was almost 40 years old. I just never needed one. Not that I didn’t know how to drive; I did—I just didn’t have a car of my own. When I was a kid, I could use my parents’ cars. Then when I went away to college I neither wanted nor needed one. The same went for graduate school. Later, as a college professor, I lived right next to the school in a downtown area. Who needed a car? If absolutely necessary, I could always borrow somebody else’s. It wasn’t until much later in life that I saw that I would need some kind of reliable way to transport self and stuff from place to place, with all the responsibilities and consequent headaches attached.
How I envy free-lancers who work in an urban environment! The subways, the buses, the quick, cheap taxi ride to get from one court to another or from home to that early morning assignment… How wonderful it must be! No parking problems, no GPS foul-ups, no tiny Mapquest printouts! But no, I chose to go live in the boonies, where the nearest courthouse is at least a half-hour drive away.
So now I am the proud owner of a car. It’s not new by any means, but it takes me where I need to go. Why? Because I take very good care of it. With the help of a supportive husband, I have learned when to take the darn thing in for maintenance, when to change the oil, when to rotate the tires, why pay attention when that pesky engine light goes on. Yes, some day, I’d like to get a brand new car, but meanwhile, I am happy to say that I can get to my assignments in a timely manner, and quite confidently too, thank you.
That is not to say that anything could happen at any time, in spite of all your care and attention to Old Reliable. Just a few weeks ago, a colleague called in a panic because his car was having transmission problems. Could I cover the case? Fortunately, I could and did. Now, I know that Frank takes meticulous care of his vehicle. You just never know. But your best bet is to do everything you can to forestall any problems. You ignore you car’s needs at your peril.
Now let’s talk about your car and your taxes. I noticed in Gio Lester’s piece last week (Basic Acconting II) that she touched briefly on this subject, and I’d like to make some clarifications. If you are a free-lancer, not only is your gas deductible, but also the cost of your car’s maintenance, any mileage not paid for by your client, parking and tolls, among quite a number of other possible deductions (See http://www.irs.gov/pub/irs-pdf/p463.pdf Section 4, pp. 15-26)
Keeping a record of your maintenance is easy. Just keep the receipts in a file you can locate and consult later and/or make an accounting as you go along. This includes things like new windshield wipers and fluid, oil, etc. I usually keep a log because I am too lazy to go back through the receipts and add it all up. So much quicker!
Mileage is a little trickier. When I work in a neighboring state, all of my mileage is reimbursed. In my own state, I am paid a certain amount for anything over 25 miles. Any mileage not paid for is deductible. Since I keep a daily log of my assignments, I enter in the mileage amounts the same time that I enter the assignment. This way I can just add things up at the end and voila, it’s off to the accountant!