It’s tax season… what car-related things do you need to keep in mind?
Tax time… Not many people enjoy this process… because so few of us understand it. Every year, the rules change. You should consult a certified tax professional before taking deductions. The IRS allows you to deduct the cost of operating a vehicle for several different reasons. Ask your tax professional which of the following deductions you should use.
If you use your own vehicle during your work day to drive from your office to another location, those miles may be eligible for deduction of $0.56 cents per mile if your company doesn’t reimburse you for mileage. If you are a freelancer, who visits clients throughout the day, your mileage is deductible. But, 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:
- parking fees
- insurance premiums
- registration payments
- repairs and maintenance
- interest to loan
- state taxes
***Please note that Depreciation will cancel out your ability for some of your deductions. Also, if your car is for both business and personal usage, then you need to keep track of your business-related expenses.
Moving / Relocation
Did you move last year? If you used your personal vehicle to move more than 50 miles you are eligible for a “Moving Expense Tax Deduction.” (form 3903).
Check the restrictions to see if you quality.
Did you know that all the time you volunteer has tax benefits? That’s right…
If you used your car to help out with any charitable events this year, you can include those costs as part of your charitable donations.
Did you drive yourself, or a loved one to get medical attention? There’s a deduction for that too. Check to see if you qualify.
Consult a Professional
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 to have 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.