One of the most common tax deductions for those who have a business is the use of a vehicle. If you use your vehicle for business then depending on your situation, you could reduce your business income significantly. That could be a big boost to your tax situation.
By reducing your business income you could save on both your personal income taxes and your self-employment taxes. Here’s what you need to know about claiming your vehicle expenses as a deduction to help you save more on taxes.
When calculating your vehicle tax deductions, you have two options. You can use the Actual Expenses Method, which are the exact expenses you incur when using your vehicle for your business. But you can only claim the percentage of expenses used for business purposes not personal. These include:
Fuel and oil
New tires
Car washes
Insurance
Depreciation
The other option is to use the Standard Mileage Method. With this method you need to track all the miles you use your vehicle for business purposes. Then you multiply your business miles by the amount designated by the IRS. For the 2018 tax year, that’s 54.5 cents a mile.
Either way, if you use your vehicle a lot for business, keeping track of and claiming your expenses could save you a significant amount at tax time.
The post How to Claim Deductions for the Business Use of Your Vehicle first appeared on Advisors to the Ultra-Affluent – Groco.
