When it comes to tax deductions, you want to take advantage of as many of them as possible. But are car expenses tax deductible? In today’s blog post, we answer this and other common questions about cars and tax deductions.
What Is a Tax Deduction?
Before we explain if car expenses are tax deductible, let’s take a closer look at what a tax deduction is.
Simply put, a deduction is an expense you can use to lower your taxable income. In other words, tax deductions help you save on taxes.
For example, donations to qualified charitable institutions are tax deductible.So if you earn $70,000 a year, and you make a $1,000 donation, then your taxable income for that year won’t be $70,000 but $69,000
Are Car Expenses Tax Deductible?
The simple answer is that car expenses are deductible — but only in some cases. Let’s see what this means.
First off, you can write off your car-related expenses only in certain cases. If you use your vehicle only for personal purposes or to commute to and from work, then you probably won’t be able to claim your car expenses as a deduction on your car return.
However, if you can prove that you use your car for business purposes, then you can deduct some car expenses.
Taxpayers who use their car for business have two options to deduct the expenses related to their vehicles:
- Use the actual car expenses
- Use the standard mileage rates set by the IRS
There are three categories of standard mileage rates: business, charitable, and medical/move. The rates are adjusted every year and you can check them on the IRS website (click here the 2022 standard mileage rates).
If you decide to use your actual car expenses, you have to keep an accurate records of expenses like:
- Business-related garage fees
If you have questions about the car expenses you can deduct or want to discover which deductions you qualify for, contact the experts at JT Taxes. We’ll be glad to answer all your questions and make sure you pay only the tax you owe.
Have Tax Questions? JT Tax Services Is Here To Help!
At JT Tax Services, we give you the peace of mind that comes with knowing that you are limiting your liability while staying compliant with all regulations.We are located in Oxnard, California.
Contact us today by email (firstname.lastname@example.org), telephone (805-984-8890), or through our social media accounts on Facebook, Twitter, and LinkedIn to schedule a consultation or to learn more about our services.