Standard mileage rate.
The standard mileage rate is 36 cents for each mile of business use in 2003.
Special depreciation allowance.
The special depreciation allowance increases from 30% to 50% for most new vehicles acquired after May 5, 2003. If
the 50% allowance applies, you
may elect to use the existing 30% allowance or elect out entirely for any class of property. For more details, see page 5.
Limit on depreciation and the section 179 deduction.
The first-year limit on depreciation and the section 179 deduction for most vehicles eligible for the 50% special
allowance (including vehicles for
which you elect the 30% allowance) is increased to $10,710. If you elect out of both the 30% and 50% special allowances, this
limit is $3,060. For
trucks and vans, the first-year limit is increased by $300 (regardless of whether the 30% or 50% special allowance applies).
For more details, see
page 7.
Use Form 2106 if you are an employee deducting ordinary and necessary expenses for your job. See the flowchart below to find
out if you must file
this form.
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense
is one that is helpful
and appropriate for your business. An expense does not have to be required to be considered necessary.
You may be able to file Form 2106-EZ, Unreimbursed Employee Business Expenses, provided you use the standard mileage rate (if claiming
vehicle expense) and were not reimbursed by your employer for any expense. See Form 2106-EZ to find out if you qualify to
file it.
You cannot deduct expenses for travel (including meals unless you used the standard meal allowance), entertainment, gifts,
or use of a car or other
listed property, unless you keep records to prove the time, place, business purpose, business relationship (for entertainment
and gifts), and amounts
of these expenses. Generally, you must also have receipts for all lodging expenses (regardless of the amount) and any other
expense of $75 or more.
For more details about employee business expenses, see:
- Pub. 463, Travel, Entertainment, Gift, and Car Expenses.
- Pub. 529, Miscellaneous Deductions.
- Pub. 587, Business Use of Your Home (Including Use by Daycare Providers).
- Pub. 946, How To Depreciate Property.
