 Looking at the income tax formula, we're focused online, one that being income. Remember in the first half of the income tax formula is in essence an income statement, but just to outline the scaffolding, other forms and schedules flowing into it, one being the schedule C, in essence an income statement in and of itself, it having business income minus business expenses. The business net income rolling into line one of the income tax formula here, that being income. First page of the form 1040, noting that the schedule C rolls into the schedule one, which would roll into page one of form 1040 line number eight. Schedule C profit or loss from business, noting it is an income statement in essence with income minus the expenses. We're focused on the expenses side of things here. This time focused on the car and truck expenses. One which often is another wrinkle, another area of difficulty for multiple different reasons. One is going to be because you might have cars and trucks that are personal versus a business. You might be using some personal and some business. We need to break out from business and personal as we have seen in a prior presentation. That's the general concept we need in order to be deducting because it needs to be ordinary and necessary for business to be deducting on the schedule C. We also have different methods for tracking the use of an automobile. We can track the actual expenses, in which case we have to have the added burden of putting it on the books as an asset and depreciating it, having limitations possibly on the type of depreciation methods for automobiles and whatnot, and then track all of the expenses related to the automobile trying to break out between business and personal, and or we might have a more of a simplified method, which would be a mileage type of method, which would be easier because normally we would track just simply the miles in that case. And then there's a question of, well, which method would result in more of a deduction, which is more of a complicated question than you might think because we could think about that question as of the deduction for this year versus the deduction over the life of the automobile used in the business because then that leads to the question of, if I choose one method or the other, am I locked into choosing one method or the other, or are there instances where I can change methods? We know that the general rule for accounting methods is that the IRS likes you to stick to a method once you have that, so you might have restrictions then to go back and forth between methods for tracking the car and truck expenses. Okay, that said, if you use your car and truck in your business, you may be able to deduct the costs of operating and maintaining your vehicle because it is a business expense, you would think. You may also be able to deduct other costs of local transportation and traveling away from home overnight on business. So there becomes this kind of issue in terms of what is constituting traveling and they have this overnight type of thing there to help us with that categorization we might dive into in a little bit more detail in future presentations. So local transportation expenses. So local transportation expenses include the ordinary. Ordinary legume. And necessary costs of all the following, ordinary and necessary being those key terms for a business expense in general. So getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. So it's not transportation away from your general vicinity, you're moving around your general vicinity but notice you're going from one workplace to another not from your home to your primary workplace which might be categorized then as commuting. So tax home is defined later. So visiting a client's customers. So if you're visiting your customers then you would think that would be ordinary necessary going to a business meeting away from your regular workplace and then getting from your home to a temporary workplace when you have one or more regular places of work. So notice all of these kind of revolve around non-commuting miles. Commuting being going from home to your normal workplace and the idea would be that normal people don't get commuting deductions like if you have a W-2 job. So that would be like they're trying to say commuting may not be part of the ordinary and necessary and all these other stuff then would be. So these temporary workplaces can be either within the area of your tax home or outside that area. So now we've got these definitions that come into place what's my home and what's my workplace so that I can determine if I'm doing a commuting situation or a non-commuting situation and if I'm in the general facility of my workplace or if I'm outside of it doing travel possibly. Okay so local business transportation does not include expenses you have while traveling away from home overnight. So those expenses are deductible as travel expenses and are discussed later under travel and meals. So that's kind of the definition you're overnight traveling so still may be deductible but most likely are if they're for business but they're gonna be under travel and meals where you have slightly different kind of rules and whatnot with regards to them than here. So however, so if you use your car while traveling away from home overnight use the rules in this section to figure your car expense deduction. So we're gonna use the methods here which we'll talk about shortly to figure the car expense deductions for it for the travel too. So generally your tax home is your regular place of business regardless of whether you maintain your family home it includes the entire city or general area in which your business or work is located. So let me jump to this traveling thing one more time. Obviously if you're traveling away from the general facility or your general area then your travel expenses might not be your car. You know, you'd have travel of the air and whatnot taxing whatnot but if you are using your car while traveling away from home overnight so use the rules in this section to figure your car expense deduction. Okay, example, you operate a printing press out of rented office space. You use your van to deliver completed jobs to your customers. So you can deduct the cost of round trip transportation on between your customers and your print shop. So you're at your shop, that's where your work is. You're going to your customers, driving to the customers of course you would think would be a deductible transportation thing driving your car over there. So caution, you cannot deduct the cost of driving your car or truck between your home and your main regular workplace. This is where it becomes messy because that's the commuting miles. So when you're trying to figure out the actual costs it becomes difficult to do that because now if you're filling up your tank for example then it's kind of difficult to say well I'm filling up my tank but I'm not going to count the costs that were related to the commuting or my personal travel versus my business travel. You see where that can get messy. It can get a little bit easier to do that if you have a mileage kind of method because then you can try to determine the mileage that you used for the commute versus the mileage that you used for the business. So these costs are personal. It's personal. Commuting expenses, which aren't deductible. Office in the home. So your workplace can be your home if you have an office in your home that qualifies as your principal place of business. So now we've got this idea of a principal place of business as a sole proprietorship. Well what if that's my home because my home is the office. So for more information you can see business use of your home later to determine if the home is an office. So example, so you are a graphic designer. You operate your business out of your home. Your home qualifies as your principal place of business. You occasionally have to drive to your clients to deliver your completed work. You can deduct the cost of the round trip transportation between your home and your clients. So now you're driving from your home to somewhere else which you might think would be a commuting thing personal versus a business expense. But it's not because now your home is your principal place of business. So if you're driving to your client from your home you would think that that would be a business deduction because your home is your office. Methods of deducting car and truck expenses. So for local transportation or overnight travel by car or truck you can generally use one of the following methods to figure your expenses. You got the standard mileage rate and then we've got the actual expenses. So you could try to track the actual expenses. As we saw there's some complications to try to parse out the business versus the personal with regards to trying to track your gas and all that kind of stuff versus the standard mileage rate which of course would be a little bit easier but you still need to track your mileage's. And then of course there's a question of which of these two would be most beneficial not just in the first year but in years going forward as hopefully the business continues and you use your automobile within it.