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If you’re an entrepreneur you should know about hidden expenses when operating your business like maintaining equipment including cars or trucks that generates your income. Maintenance costs can have an effect on your profit margin. You should know that the IRS does allow certain businesses and the self-employed to take a car tax deduction if the vehicle is used for business purposes.
New Car Sales Tax Deduction 2010, 2011
If you use your vehicle for personal and business you must seperate the expenses between the two. Personal expenses cannot be deducted but business can. The expenses that are allowable are gas, oil, repairs, insurance, depreciation, taxes and licenses. You may only take depreciation on your vehicle if used for more than 50% in the operation of your business which is an expense allowance over the estimated life of the vehicle.
There are two ways you may take a car tax deduction. A business mileage rate which is 50 cents a mile since July 2010 or an actual method. The business mileage method is taking the business miles driven in the calendar year and multiplying by the mileage rate. If you elect to use this method you may not deduct maintenance or depreciation. If using the actual method these would be the actual costs you accumulated within the year along with depreciation.
How to Use Car Lease Payments as a Tax
So if you’re searching for additional deductions for your business don’t forget take a look at a car tax deduction to help you reduce your tax liability. The IRS consistantly changes their tax codes for business vehicles, make sure you have the updated information for the year you are filing. If unsure if you qualify for any vehicle deductions seek professional help with a certified public accountant.
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