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Self-empoyed auto deduction confusion Texas

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  • Self-empoyed auto deduction confusion Texas

    Please help, last minute desperation still don't know what to file. This is in regard to having replaced the vehicle I was using for both business and pleasure, with one which now costs more in payments, interest, and insurance, and therefore my question is about which kind of deduction for my business mileage would serve me better now. I've been self- employed for fourteen years, using my own vehicle, and have been deducting the standard mileage rate for my business miles - very easy to deal with when doing my taxes.

    In previous years, I owned and used an older vehicle which was fully paid-up as I had bought it outright from a private seller.

    This year I own a different vehicle in use since August 2006 when I bought it at a dealership, for which I am now making monthly payments, and my auto insurance payments have tripled in amount due to taking on more coverage.

    So, I've gone from a car I had no payments on, with low monthly insurance, to a car I'm making payments on and paying more in insurance.

    Also, important to note is: this year I am driving many less business miles than I have in the past, reducing the miles I can honestly report and deduct to very little. At the mileage rate system, I won't be able to deduct very much anymore.

    My question:
    Is there any part of my expenses on my newer vehicle -- the payments, or the interest on the payments, or the extra auto insurance -- that I can deduct as part of my other business expenses (the supplies I buy for the business), without leaving the simplicity of the "standard mileage rate" auto deduction?

    Or would I have to switch to the "actual auto expenses" mode, complete with depreciation etc? If I do that, don't I have to stay with "actual expenses" always after, and cannot switch back to mileage rate mode in subsequent years?

    Many thanks in advance for any help.
    Last edited by fahren; 04-16-2007, 04:44 PM.