No, the average driver can not deduct any of their auto expenses on their taxes. However, those who use their vehicles for business purposes can. A number of expenses can be deducted on taxes if a person uses their car, truck, or SUV when handling work for their small business.
The insurance premiums you have to pay may be deductible. As long as you use the vehicle for business purposes some of the time, you are able to take a deduction for a portion of the cost. You can take your business mileage and divide it by your total mileage to get the percentage of business-related costs that will be deducted. This could help save big on your final tax bill. You can also save throughout the year by searching for a more affordable insurance policy. Get basic policy quotes and even SR22 insurance quotes and find a premium plan you can afford. The tax write-off will just be an extra bonus.
Say you put gas in your car and then drive to the computer store to purchase a new computer for your home business. This amount can get written off on your taxes. Whether you drive to the bank to deposit a check for your services, head to the office supply store to purchase more stationary or pens, or even meet with an accountant, the gas used and the mileage should be recorded. The IRS requires detailed proof for deducting automobile expenses like this, so be sure to keep a record book in your vehicle so you can record all transactions carefully.
If your vehicle breaks down while running errands for your business, you can deduct those repairs on your taxes. Even getting an oil change can count. Be sure to keep receipts of any money spent on repairs so these can be written off come tax time.
Standard Mileage Rate Vs. Actual Expenses
There are two main ways to claim expenses. You can either keep track of all actual expenses used for business purposes, or you can follow the standard mileage rate. This rate may change from year to year. The 2018 rate is 54.5 cents per mile, as listed on the IRS website. You need to keep a record book in either case. You should be able to purchase an auto mileage log from an office supply store. Start by writing down the odometer reading to verify the number of miles your car started with before you began using it for business. You will need the final odometer reading at the end of the year as well. This gives you your total mileage. You should also have a record of business-specific mileage used.
Tax write-offs can reduce what you owe significantly and maybe even help you obtain a refund. Be sure to find all possible expenses worth deducting, including automobile use for business, and include them when you file. It’s never too early to begin tax planning, so always be on the lookout for ways to save. You could save big if you do it right.