How much of a loss can I claim on my taxes?

If you drove 125 miles per day for 120 days that is 15,000 miles which, at the IRS standard mileage rate of 48.5 cents in 2007 totals $7,275. This means you paid the newspaper company $650 for the privilege of getting up at an ungodly hour seven days a week to deliver their product.

Unless you used that car ONLY for delivering the papers, you'd have to split up the costs for what was business miles (the deliveries), and what was commuting or personal miles. You can take the flat mileage rate of 48.5 cents a mile for your business miles, which would probably work out better. That would come to $7275. You can claim a loss against other income if you have any, but if this keeps up year after year, at some point the IRS is going to question why you do a job that earns you less than your costs.

You can claim anything you can prove. Even if you don't have receipts, the IRS will generally allow you a certain amount of mileage costs, so if you document what your route was and how many times per week you had to drive it, that can be sufficient proof, especially if you purchased your car at the time of employment and have records of the odometer readings to back you up. For the tires and brake work, you should have receipts, but if you paid by credit card or check, the bank/card statements or cancelled check qualify as proof of payment. They can also provide proof of fuel usage if you paid with your card. If not, document the cost of gas each week you were employed vs. the amount you have to put in your vehicle. Keep in mind you are not allowed to claim fuel used for personal purposes, only business. Just keep a copy of your statement with your records. There are plenty of businessed that claim a complete loss for the year. As to whether it makes you more or less susceptible to an audit---probably more, but I couldn't tell you by how much. Even if you're scrupulous in your accounting and record keeping, you can still be subject to an audit, so it's always a good idea to be sure you have records for everything and keep them in a safe place where you know you'll be able to find them should the need arise.

With no receipts you'll probably have to take the IRS mileage deduction of 48.5 cents per mile.

You don't get to claim the car, or the tires, only the part of the depreciated expense directly attributable to your business expense. So if your jalopy will last 5 years, you get to deduct one fifth of the ratio of your business driving to your pleasure driving of the cost of the car and tires. You can estimate your gas and toll expenses.

Most people find the 48.5 cents per mile much simpler to use.

125 X 120 X .485 = 7275

6625 - 7275 = (650)

unless you used the car 100% for delivering papers only - you can only claim a portion of the car expenses - did the car only get 12-13 MPG? there must have been personal mileage on the car too.