Double Tax on "Auto Deduction"

Most doctors love to have an automobile in their corporation or as part of their sole proprietorship. That's fine, but don't get too excited! It's not as easy as paying for gas, insurance, maintenance, repairs, etc. with your business checking account and writing the whole thing off. That wouldn't be right!

You can only deduct the business use of your auto. This doesn't mean you get to pick a number out of the air, like 80% or something. This means you are supposed to keep track of your business mileage versus personal use. You need to keep an AUTO LOG! While it may seem tedious to do so, it is one of the only sure fire ways to actually keep your auto expense deduction.

If the IRS decides to audit you, one of the easiest things to get you on is your auto expense... mostly because not very many people are able to substantiate the deductions they take.

If you are operating as a corporation, the non-business use of the auto should be included on your W-2 as taxable income! Don't like the idea of that? Try not putting any on your W-2. If the IRS comes in and finds you've got a corporate auto, using it personally, they will most likely reverse your entire auto deduction AND recognize the full amount as personal use and make you pay taxes on that amount. That sounds just about as good as double taxation.

If you are a dental or medical specialist, you may be able to justify more business use than a general practitioner. The more you use your auto to run business errands, do continuing education, travel from office to office, etc. the better off you are.

One thing that people always get wrong is commuting... this is NOT BUSINESS USE!

Well, that's enough doom and gloom for one day... Just be happy that you get to deduct any auto expense... most people don't! Have fun keeping track of those miles!