Automobile Tax Expenses

Automobile Tax Expenses



Automobile Tax Expenses
If you​ use a​ vehicle for conducting business,​ you​ can deduct certain automobile tax expenses from your tax bill .​
This is​ true even if​ you​ use the​ vehicle for personal and business needs .​
Automobile Tax Expenses
The powers that be have historically written sections into the​ tax code promoting business activities .​
One of​ the​ traditional write-offs has always been the​ expenses associated with using a​ vehicle for business purposes .​
The simplest automobile tax expense situation is​ one in​ which a​ vehicle is​ used entirely for business .​
For example,​ if​ you​ have a​ van used for a​ delivery service and nothing personal,​ all expenses associated with the​ van can be written off .​
This is​ known as​ the​ exclusive use situation .​
For many small businesses,​ however,​ a​ vehicle will be used for both personal and business reasons .​
Where you​ use a​ vehicle for both personal and business reasons,​ you​ can only deduct the​ automobile expenses associated with the​ business use .​
Keep in​ mind that driving to​ and from work is​ not considered business mileage,​ while driving from an​ office to​ meet a​ client is​ considered business mileage .​
There are two methods for determining deductible automobile tax expenses .​
The first is​ a​ simple calculation known as​ the​ standard mileage deduction .​
The second is​ the​ actual expenses method .​
You can choose whichever deduction provides you​ with the​ biggest deduction unless you​ lease the​ car .​
With a​ lease,​ you​ must use the​ standard mileage deduction .​
The standard mileage rate deduction is​ a​ calculation wherein you​ multiply your total business mileage for the​ year by a​ figure provided by the​ IRS .​
For the​ first eight months of​ 2018,​ the​ figure provided by the​ IRS is​ 40.5 cents per mile .​
For the​ last four months of​ 2018,​ the​ figure has been bumped up to​ 48.5 cents to​ reflect high gas prices .​
The actual cost expense option is​ exactly what it​ sounds like .​
It is​ the​ actual cost associated with using the​ vehicle for tax purposes for a​ particular tax year .​
Automobile tax expenses will include gas,​ tires,​ repairs,​ oil changes,​ registration costs,​ licensing,​ insurance and so on​ .​
In many cases,​ the​ actual expense deduction will end up being larger than the​ standard mileage deduction .​
Regardless of​ the​ method you​ choose,​ you​ must document the​ automobile tax expenses .​
This means keeping a​ mileage book and receipts of​ anything you​ intend to​ deduct.




You Might Also Like:




No comments:

Powered by Blogger.