Tax time… Not many people enjoy this time of year… because of all the confusion around it. However, tax season isn’t all bad. For some of us, including car owners, it’s a chance to save some extra money. If you drive a vehicle for one of the following reason, you might be eligible for a vehicle tax deduction. However, as the rules are subject to change every year, don’t forget to consult a professional before taking tax deductions.
Business Vehicle Tax Deductions
If you use your own vehicle during your workday to drive from your office to another location, your car might be considered a business vehicle and eligible for a tax deduction. If your company didn’t reimburse you for mileage, you might be able to deduct $0.56 cents for every mile you drove for them.
If you’re a freelancer who visits clients throughout the day, your mileage is tax deductible. However, your drive to and from home may not be. Check with your accountant to make sure you maximize your home office and mileage deductions. If your car is for business only, then the entire cost of operating and maintaining your car is deductible. This includes:
- mileage
- repairs
- parking fees
- tolls
- insurance premiums
- registration payments
- repairs and maintenance
- depreciation
- interest to loan
- state taxes
***Please note that depreciation will cancel out your ability to make some deductions. Also, if your car is for both business and personal usage, then you need to keep track of your business-related expenses.
Tax Deductible Moving/Relocating Expenses
Did you move to a new home last year? If you used your personal vehicle to move over 50 miles, you’re eligible for a “Moving Expense Tax Deduction” (IRS form 3903). Check the restrictions to see if you qualify.
Tax Deductible Charitable Contributions
Did you know that all the time you volunteer has vehicle tax deduction benefits? That’s right… If you used your car to help with any charitable events this year, you can include those costs as part of your charitable donations.
Tax Deductible Medical Expenses
Did you drive yourself or a loved one to get medical attention? There’s a vehicle tax deduction for that too. Check to see if you qualify.
Consult a Professional About Vehicle Tax Deductions
As you likely already know, taxes can be difficult to complete accurately. The IRS has specific regulations of what you can and cannot deduct. You’ll be better off in the long run having a certified tax professional prepare your taxes for you.
So, keep this in mind, if you didn’t keep meticulous records throughout last year, tread lightly. Consult your tax professional and devise a system to keep track of all your car-related expenses next year, so that you don’t overpay on your taxes.
Did you save extra money from this year’s tax season? Why not spend it on some quality car insurance? The General has affordable rates for every driving record and credit score. Get a car insurance quote in under two minutes to see how much you can save.
