Writing off the mileage for the business use of your car is so common now and days that there’s even “an app for that.”
When you reach your destination, you can swipe left if it was a personal trip, or right if the trip was business related. Gone are the days when you had to keep a clipboard on the dashboard to record your every movement. Let’s not mention the headaches involved if you happened to forget to log your mileage for a few weeks (or months.) OH, THE AGONY!
But just because writing off your business mileage is easier than ever, doesn’t mean it’s the only tax write-off you can use for your car. In addition to writing off your mileage, the Internal Revenue Code allows you to write off your leased car (but not a loan.)
Yes, it’s true. Buying a brand new $65,000 Tundra for your landscaping business is unwise, even if you plan on using it as a tax write off. A better option would be to lease the Tundra and then use THAT as a tax write off (and if you don’t want to take the depreciation hit, you can always lease a used car instead.)
So there you have it, paying cash for a car is not always the best decision when it comes to saving money on taxes.
As always, the previous financial advice isn’t a one-size-fits-all approach. If you want your own personalized tax planning strategy, please get in touch with one of our tax professionals today.