CAR COSTS UP

Physician's Money Digest, June30 2003, Volume 10, Issue 12

Tax tip:

Buying a car on a fixed incomeduring retirement is tricky enough.Making things even more difficult,driving a new car is more expensivethis year, according to the AmericanAutomobile Association (AAA). Theaverage cost to drive a new car in2003 is 51.7 cents a mile, up 1.5cents a mile, or about 3%, from lastyear. The last time the cost of drivinga new car rose that significantly wasback in 2000, when it went up 4.5%.The AAA, which said higher fuel andinsurance costs were to blame formuch of the increase, also noted thatthe actual cost of driving a new carwas more than 40% higher than the36 cents-a-mile tax deduction allowedby the IRS for business use ofa car. If you currently usemileage to figure your business-cardeduction, talk to your tax professionalabout switching to actual costs.