J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

43.2 Expense Allocations

If you do not claim the IRS mileage allowance, you may deduct car, truck, or van expenses on business trips such as the cost of gas and oil (including state and local taxes), repairs, parking, and tolls.

If you use your vehicle exclusively for business, all of your operating expenses are deductible. However, if you are an employee, the deduction is limited by the 2% adjusted gross income (AGI) floor (19.1).

Apportioning vehicle expenses between business and personal use.

For a vehicle used for business and personal purposes, deduct only the depreciation and expenses allocated to your business use of the vehicle (43.3–43.5).

The business portion of vehicle expenses is determined by the percentage of mileage driven on business trips during the year.

EXAMPLE

In 2012, you drove your car 15,000 miles. Of this, 12,000 miles was on business trips. The percentage of business use is 80%:

Your actual car expenses (gas, oil, repairs, etc.) for the year were $1,000, of which $800 ($1,000 × 80%) is deductible. If you are an employee, the $800 is only deductible as a miscellaneous itemized deduction subject to the 2% AGI floor (19.1).

Interest on vehicle loan.

If you are an employee, all of the interest is considered personal interest and is not deductible even if you use the vehicle 100% of the time for your job. If you are self-employed, the allocated business ...