Tax Deduction For Business Car Killer Guideline For Taxpaye
You may deduct the cost of using your vehicle for business travel purposes. The transportation expenses are allowed if they are incurred in the course of your business. For example, travel at a business meeting away form your work place, within the city limits, or the area you live, is considered a tax deduction for business car.
Work-Related Car Expenses Calculation
In determining the amount deductible for your car expenses, you may choose the standard mileage rate method or the actual expense method. The rate for 2010 is 50 cents per mile. When calculating your deduction you can include the parking fees, and taxes and tolls incurred in your business travel.There are certain requirements imposed by IRS, if you choose to use the standard mileage rate method:
- You must own or lease the car.
- You are not allowed to use the car to transport people or property for compensation.
- You cannot use five or more vehicles at the same time.
- You must not have claimed a depreciation deduction (using the Modified Accelerated Cost Recovery System) or a special depreciation allowance on your car.
- If you own a car, you must use the standard mileage rate in the first year of use. After that, you have the option to choose between standard mileage rate and actual expenses.
The actual expenses method includes the cost of gas, oil, licenses, registrations fees, tires, leases payments, etc. You can deduct separately the parking fees, tolls or other taxes incurred in your business travel.
Claiming A Tax Deduction For Business Car Expenses
If you receive reimbursement for your transportation expenses and those are paid by your employer under an accountable plan, you will not receive tax deduction for business car expenses.If the reimbursement is paid by your employer under a non-accountable plan, the payments must me included in your wages. They are deductible as itemized deductions. The 2% of AGI rule applies.If you are having difficulties determining which expense may be deductible for your tax return, visit our website and help yourself to our FREE ADVICE tab. We offer all the information you may need, so you can handle your tax problem on your own. If you would like professional assistance and need to speak with someone, call us today at 713-774-4467. We’ve been in business over 30 years and we have the knowledge and experience to help anyone in need.