07 Aug Filing Vehicle Charges on Your Taxes
Writing off your vehicle on your taxes might sounds simple, but like anything else regarding the IRS, there are specifics that must be addressed. If done accurately, itemizing your vehicle expenses can result in a portion of a lease payment being used as a business expense.
A portion of costs spent on vehicles that are used for business can be counted when determining tax deductions. You’re allowed to deduct the standard mileage rate or use the actual expenses incurred during the business use of the vehicle.
To calculate costs, you can use the standard mileage rate for a year (for 2016 business driving is 54 cents per mile) but you would not deduct your actual car expenses that year. Depreciation, lease payments, maintenance and repairs, gas, oil, insurance, or vehicle registration fees cannot be deducted either.
Under the actual expense method, you deduct the actual costs you incur each year to operate your car, plus depreciation (according to a tax code schedule). Your deductible costs include gas and oil, repairs and maintenance, license fees, insurance, tolls, and even car washing.
If you plan to take a vehicle deduction, it is essential to keep a detailed log of your business miles and other expenses if you want to write them off.