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Car Deductions for Business

If you are using a car for business purposes, it is possible to deduct all the expenses you’ve earned. Now, you should be aware that if you also use it for personal use, you should determine the percentage of time for the business use.

After this, you can now employ two methods.

Calculate Deduction for Business Car

When you run a business, it is important that you have a car. However, there are times when a certain business doesn’t own a separate car and so the owner makes use of his or her personal vehicle. Did you know that you can have car deductions for business? The expenses can be taken off the taxes that you’re bound to pay but only if you qualify. You should be aware that the car expenses can comprise a large portion of your income which includes parking fees, tolls, repairs, insurance, gas, and other payments. You can enjoy great savings if you’re able to deduct such amount.

Tax Deductions for Business

Not everyone can qualify for the said deduction. There should be a provable and direct connection between the business and your car. If you commute, this is not deductible. Salespersons that use their car when driving around town to visit clients are qualified for this tax benefit. Even home business owners can also take out their car expenses when they use it for attending a business lunch, going to the post office for business purposes, and getting supplies from a store. Such expenses can be claimed under Schedule C or Form 1040 Schedule A. Take note of the right form to use if you’re an employee or a self employed.

Vehicle deductions can be calculated using two methods and the most common is standard mileage. To use this method, you should find out the rate that IRS has set and multiply it to the miles you’ve driven. If the car is being used for personal and business use, there is a need to determine the percentage for the time you’ve used the car for business purposes. You should keep in mind that if you use a taxicab or any other car for hire, you can’t compute for the standard mileage.

The other method is called actual expense method. If you want, you can compute for both methods and see which figure is better. It’s harder to calculate for the actual expense because there is a need to find out the depreciation. You can access the tables provided by IRS. If you have any doubts, you can read the Publication 946 of IRS or you can hire a tax professional. You don’t have to shoulder the expenses you’ve incurred by using your car. There are ways to deduct car expenses but this will only work for you if you know how to calculate the costs. What are you waiting for? Start working on your car deductions today.

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