Tax Write-Offs: Use your Vehicle as a Business

Costs associated with operating a business vehicle are tax-deductible under certain qualifying circumstances. You may qualify to deduct some of your

vehicle-related expenses if you use your car for business purposes. The IRS defines a car as any four-wheeled vehicle—including a truck or van—intended for use on public streets, roads, and highways. It musn't exceed 6,000 pounds in unloaded gross weight. Exceptions include ambulances, hearses, vehicles used to transport people or property for money or hire, or trucks or vans that are qualified non-personal use vehicles.1


You can take this tax deduction in a few different ways, from the standard mileage rate and actual car expenses to the Section 179 deduction. However, if you use your car for both business and personal driving, you must split the expenses based on your actual mileage.



Percentage deductible: 100%


Eligibility: Business vehicles are cars, SUVs, and pickup trucks that are used for business activities. Taxpayers looking to write off business use of car expenses will need meticulously kept records to provide to the IRS.


Example deductions:

  • Registration fees and taxes

  • Gas and oil costs

  • Maintenance and repairs

  • Licenses

  • Vehicle insurance

  • Rental or lease payments

  • Tolls and parking fees

Special considerations: If the taxpayer uses the car for both business and personal purposes, they must split the costs based on actual mileage. Vehicles used as equipment, such as dump trucks, and vehicles used for hire, such as taxi cabs and airport shuttle vans, do not qualify.

Beginning on January 1, 2022, the optional standard mileage rate used to deduct the costs of operating a business vehicle changed to 58.5 cents per mile.


Check out the link below for a list of other tax deductions you can claim this tax season!


https://www.ritbsinc.com/small-business-tax-deduction-list


What questions do you have about tax season? We are here to provide help with tax preparation, accounting, payroll management, and business formation! R&I Tax and Bookkeeping is here to help! You may contact us via our 'Contact' page at https://www.ritbsinc.com/contact. We can also be reached via phone at 253-777-1106.

 

Ames, E. (2022, January 5). Vehicle Tax Deductions and Write-Offs Explained (2022). The Balance. Retrieved January 10, 2022, from https://www.thebalance.com/vehicle-tax-deductions-and-write-offs-explained-5197431


Osterhaus, E. (2021, February 1). Complete list of small business tax deductions (2021). QuickBooks. Retrieved December 16, 2021, from https://quickbooks.intuit.com/r/taxes/small-business-tax-deductions/

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