You almost certainly know that you can write off the mileage for business use of your car. That advice is still true. A nice bonus is that it is easier than ever to track your business mileage with a variety of smartphone apps available. Mileage, however, isn’t the only automotive write-off that you should be pursuing. If you use your vehicle for anything work-related, there are deductions that you might be missing out on. Lease payments, oil changes, insurance, repairs, and even car washing and polishing could be written off. Don’t fall for tax myths, fuel your savings with automotive write-offs.
Tax Myths: I Can Only Write Off My Mileage
Mileage is the Starting Line
Smartphone apps have made tracking your mileage easier than ever. No more forgetting to record your mileage and trying to figure it out after the fact. Our favorite apps pop up whenever you reach your destination. Swipe left if it’s personal mileage. Swipe right if it’s business mileage.
For many people, mileage is the biggest auto deduction that they take. While it may not seem like much, all those miles driving to sales meetings or the airport can really add up. Keep in mind that not all mileage is deductible. In general travel between your home and your first business-related stop of the day, probably your office, as well as travel between your last business-related stop of the day and your home is not deductible. Travel between your first business stop of the day and a second are deductible as a business expense. One exception is for small business owners who use their homes as a place of business and have their home office as their principal place of business.
If you’ve been under the impression that mileage was the only write-off you could utilize for your business, that’s a myth we want to bust. Mileage is just the starting line. In truth, that standard 54.5 cents per mile allowance for business use of your car could be costing you big time.
Drive Down Your Taxes
When it comes to automotive write-offs you can generally choose either the standard mileage rate or the actual car expenses. If you choose the standard mileage rate, then you can’t deduct depreciation, lease payments, maintenance, repairs, gasoline, oil, insurance, or vehicle registration fees. Those items are deductible if you choose actual car expenses. While the standard mileage rate might seem simpler, make sure that you are choosing the option that is going to save you the most money on your taxes. Financial Gravity can help you determine which method you are eligible to use and whether the standard mileage rate or actual expenses is the best financial choice for your business.
No matter what you choose, it’s still important to track your mileage. Most people use their vehicles for a combination of personal and business use. If that describes you, then you need to be tracking your mileage and dividing between personal and business use. If you find that you are using your vehicle for business use 75 percent of the time, that same percentage of all your auto expenses are deductible if you choose actual expenses. Some business owners do have a car that is exclusively for business use. If you use your car exclusively in your business, you can deduct 100 percent of your car expenses when choosing actual expenses.
If you are choosing actual expenses for your vehicle, there may be expenses that you have overlooked in the past. In addition to all the things already listed, if you are claiming actual expenses, you can also deduct tolls, garage rent, parking fees, and tires.
Cruise to Savings With Financial Gravity
It can get easy to get off track with trying to understand the intricacies of transportation write-offs. For example, people often don’t realize that the IRS allows you to write off your leased car, but not a loan. You can even lease a used car if you don’t want to take the depreciation hit.
If you lease your vehicle and want to use the standard mileage rate, you must use it for the entire lease period. There are some situations where the standard mileage rate is not allowed, including if you have five or more cars at the same time. Remember, fines for traffic tickets are never deductible, even if you receive them doing work-related driving.
At Financial Gravity we bust tax myths to help you pay less tax. We use the IRS Tax Code comprehensively to ensure you only pay what you must. Your tax savings are sourced and referenced directly to the IRS Tax Code. Every tax reduction strategy we employ is legal, ethical, and moral. Contact us today to get started on your own strategic tax reduction plan.