If you use your car for work or your own small business, you may be wondering if you can deduct some of your car expenses on your taxes.
In many cases, you can deduct eligible vehicle expenses when you use your car for business. However, simply driving to work does not automatically make your car expenses deductible. The rules depend on how and why you use your vehicle.
What Counts as Business Driving?
Business driving generally means using your vehicle for a business purpose.
For example, you might drive to meet a client, visit a customer, pick up business supplies, travel between work locations, or make deliveries for your business.
Your regular commute from home to your main workplace generally does not count as deductible business mileage.
If you use the same car for both personal and business trips, you need to separate your business use from your personal use.
What Car Expenses Can I Deduct?
There are generally two methods for figuring your business vehicle deduction: the standard mileage method and the actual expense method.
With the standard mileage method, you keep track of your eligible business miles and use the IRS mileage rate for that tax year.
With the actual expense method, you may be able to deduct the business portion of eligible vehicle costs such as:
- Gas
- Insurance
- Repairs and maintenance
- Registration fees
- Depreciation
- Other eligible vehicle expenses
The method that works for you can depend on your vehicle, expenses, business use, and tax situation.
What If I Use My Car for Business and Personal Trips?
You don’t necessarily need a separate business vehicle to claim eligible car expenses.
If you use your personal vehicle for your business, you may still be able to claim a deduction for the business portion.
For example, if you use your car for personal errands and also drive to meet customers, you cannot simply deduct all of your vehicle expenses because some of the driving was personal.
Keeping business and personal trips separate is important when preparing your taxes.
Keep Good Records of Your Business Driving
Good records can make a big difference when claiming vehicle expenses.
Keep track of information such as your business mileage, dates, destinations, and the business purpose of your trips. If you’re using actual vehicle expenses, you should also keep relevant receipts and records.
Don’t wait until tax time and try to guess how many miles you drove for your business.
Keeping organized records throughout the year can make preparing your tax return much easier.
Local Tax Can Help With Your Business Car Deduction
Vehicle deductions can become confusing, especially when you use the same car for both personal and business purposes.
Local Tax can help you understand which vehicle expenses may qualify and how they should be reported on your tax return.
We can review your business use, mileage, vehicle expenses, and other tax information to help determine which method may apply to your situation.
Whether you are self-employed, have a side business, make deliveries, or operate a small business, keeping accurate records can help you claim the deductions you are entitled to.
Local Tax
9429 Somerset Blvd
Bellflower, CA 90706
(562) 925-2203
Contact Local Tax if you have questions about business vehicle expenses or need help preparing your taxes.