Whether you are an Employee or Business Owner, you can find tax savings
The IRS classifies "business use of a car" as travel between two destinations, one of which may include your regular place of business. If you are an employee, this may include driving from your regular place of business to a temporary location, or using your personal car to run business errands. If you are a business owner, miles driven to the bank, to an office supply store, or to a computer store; or to meet with your clients, accountant or your lawyer on business matters all count as part of your mileage deduction.
There are basically two tax methods to determine business-vehicle expense:
Actual Vehicle Expenses
These expenses include the full cost of operating the vehicle such as insurance, gas, repairs, maintenance, loan interest, lease payments, and parking and tolls. The vehicle is also depreciated over a period of time.
Standard Mileage Rate
The Business Standard Mileage Rate is 56 cents per mile. This rate factors in an average of actual vehicle expenses. But in addition to basic mileage, you can deduct loan interest, and parking and tolls.
In most cases, unless the vehicle is a large special-purpose vehicle, the standard mileage yields the highest deduction amount averaged out over time. This is also the easiest method for record-keeping
What's NOT deductible? Fines and traffic tickets, including parking tickets, are never deductible. If you are an employee and your company reimburses you for your business miles, you cannot also deduct the mileage on your tax return. Commuting from your home to the office does not count as a business purpose. However, if you have an office in your home, then traveling from your home office to conduct business is deductible. If you stop for a personal errand on the way home from a business trip, the remaining miles are considered personal mileage, so you can't include them.
It is important in the first year a vehicle is used for business purposes to determine the appropriate and best method to use. We can help you with this choice.
The IRS classifies "business use of a car" as travel between two destinations, one of which may include your regular place of business. If you are an employee, this may include driving from your regular place of business to a temporary location, or using your personal car to run business errands. If you are a business owner, miles driven to the bank, to an office supply store, or to a computer store; or to meet with your clients, accountant or your lawyer on business matters all count as part of your mileage deduction.
There are basically two tax methods to determine business-vehicle expense:
Actual Vehicle Expenses
These expenses include the full cost of operating the vehicle such as insurance, gas, repairs, maintenance, loan interest, lease payments, and parking and tolls. The vehicle is also depreciated over a period of time.
Standard Mileage Rate
The Business Standard Mileage Rate is 56 cents per mile. This rate factors in an average of actual vehicle expenses. But in addition to basic mileage, you can deduct loan interest, and parking and tolls.
In most cases, unless the vehicle is a large special-purpose vehicle, the standard mileage yields the highest deduction amount averaged out over time. This is also the easiest method for record-keeping
What's NOT deductible? Fines and traffic tickets, including parking tickets, are never deductible. If you are an employee and your company reimburses you for your business miles, you cannot also deduct the mileage on your tax return. Commuting from your home to the office does not count as a business purpose. However, if you have an office in your home, then traveling from your home office to conduct business is deductible. If you stop for a personal errand on the way home from a business trip, the remaining miles are considered personal mileage, so you can't include them.
It is important in the first year a vehicle is used for business purposes to determine the appropriate and best method to use. We can help you with this choice.
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