Tax Deductions for AutomobilesPublished:
Many people look at their car and see something that sucks up a lot of money. While it is true that cars can be expensive, there are many tax deductions to consider. The more tax deductions that you find the more money you are going to save on your income taxes. And that is something that everybody is interested in.
So, which tax deductions for cars are most common? This is the question that you need to answer as you file your next income tax return. Above all else, you should consider the mileage rate tax deduction. If you are itemizing you may be able to take advantage of this tax deduction. Of course, there are only certain types of miles that qualify including: moving travel mileage, medical travel mileage, miles traveled for business, and miles driven for charity.
The IRS has set standard mileage rates for the use of a car, truck, or van. They include: 50 cents per mile for business, 16.5 cents per mile for moving or medical purposes, and 14 cents per mile for miles driven for charity.
According to IRS Section 179, small businesses and self employed workers are able to write-off the cost of a qualifying vehicle. With this, it is possible to reduce net operating profit or increase net operating loss. With this, you can find yourself paying less in taxes. Remember, if you opt for this option you are forgoing the traditional deprecation method.
If you qualify, you can write off the price of your car, used for business, beginning in the year it is purchased. The IRS considers this date to be the one in which your car is ready to be used. What about a car that is initially purchased for personal use and then switched to business service? In this case, the car does not qualify for a write off.
Tax deductions for cars are easily among the most overlooked. What are you going to do about this? Above are a couple of the most common tax deductions for cars. With that in mind, there are many others that you need to be aware of. If you are confused and unsure of how to take advantage, hire a tax professional to explain the different tax deductions and whether or not you are eligible.
A car can cost a lot of money. If you can save on taxes by claiming tax deductions you should consider doing so.