Do you find yourself running errands for your dental practice? Do you have more than one location and travel from office to office? Are you using your vehicle for more than just personal use? If you can answer yes to any of these questions, are you getting reimbursed for the automobile expenses related to your dental practice?
Calculating your Automobile Expenses
Figuring out how to be reimbursed for your automobile expenses related to your dental practice is very easy. There are two ways to calculate it:
1.) The first method is the standard mileage rate. This method can be used if you own or lease your car. You cannot have claimed a depreciation or Section 179 deduction on your car. For business purpose, the standard rate for 2014 is 56 cents per mile. There are different rates for using your vehicle for medical purposes, moving and for charitable programs.
If you lease your car and choose the standard mileage rate, you will have to continue using this method for the entire lease period. It’s also important to remember that if you choose this method for reimbursement, it has to be done the first year you use your car for business purposes. In later years you can then choose to use the standard mileage rate or the second method of reimbursement — the actual expense.
2.) The actual expense method allows a deduction for the actual cost of operating your vehicle. The first step is to determine the business use percentage. To calculate the percentage of business use, calculate the total miles driven and the business miles driven. The business miles over the total would be the business use percentage.
Total Miles = 5,000
Business Miles = 2,500
Business Percentage = (2,500/5,000)*100 = 50%
Once you know the business use percentage, you can them calculate your reimbursement. The expenses used in the calculation are gas, oil, repairs, tires, insurance, fees, licenses and depreciation or lease payments. If your business use percentage is 50 percent, then you can be reimbursed for 50 percent of the expenses.
Choosing the Right Reimbursement Method
How do you decide which option is right for you and your dental practice? It’s always practical to calculate the deduction both ways so you can take advantage of the larger deduction. From there you can determine which method works best for you. Regardless of what method you use, the law requires that you keep adequate records to support your expenses — this includes receipts. Make sure you are keeping good records to support all auto expenses.
Contact Our Dental Practice Professionals
Need help deciding which option is best for you and your dental practice, contact Rea & Associates. Our team of bright Dental CPAs can work with you to determine the best reimbursement method for your dental practice.