How and what are the legal ways of writing off your car as a vehicle you use for work purposes?

Question

I'm starting up my own .com business and I wanted to know if I could add my car to my business and write it off in my taxes. If so what is the procedure? What paper work do I have to fill out in order to do that?Thanks

Answer 1

Anyone who thinks incorporating lets you deduct 100% of your car expenses has obviously failed to consider the fringe benefit rules for cars.

My advice? See a CPA. Its a good investment.

Edit: It appears the (wrong) answer that said you could deduct 100% of your car expenses if you form a corporation has been deleted. Just as well. Just to clarify, if you set up a corporation you can, indeed, deduct 100% of car expenses paid. However, doing that also requires you to compute your fringe benefit each year. That gets added to your W-2 so the effect is to give you a deduction for business miles only.

What this means is that you would need a better reason to incorporate.

Aside from the forms you will have to attach to your tax return there is some paperwork you MUST keep to ensure you get a deduction. Draw up a spreadsheet with the following columns:
Date, Started from, Destination, Miles Travelled, Persons met, Purpose of meeting/trip. If you have no written contemporaneous records, you have no deduction to take at the end of the year. The IRS are pretty strict about this. When you fill in your tax return you have to declare, under penalty of perjury, that you have written records of your business mileage.

There is additional stuff at the end of the year, but come back then and ask.

You can choose to either compute your expense based on actual expenses or you can take the standard deduction of 48.5c per mile. You can compute what is likely to be best for you once you have a full year's figures.

Answer 2

You can sell your vehicle to the business. In other words, put the vehicle in the business name. Check with your CPA. You will be able to take gas/oil expenses, car wash, tires, repairs and even depreciation. You will need to let your CPA know if the vehicle is 100% business use. If not, you will need to provide total miles driven and business miles driven each year. You will have to pick up the personal miles as income.

Answer 3

No "special" paperwork is needed. You just need to be able to track (and prove if audited) the business use of the vehicle. Business use means using the car for business purposes, not personal, and not commuting to and from your normal place of business.

Answer 4

You need to fill out a Schedule C for your own business. This form is very easy to fill out...self-explanatory. It will help you calculate the percentage you can deduct of your car payment, insurance, repairs, etc.

Answer 5

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Answer 6

go to an accountant, because if u get audited they take care of it but all deducatble consist of employee business expenses---odometer reading: beging of year , end of year, total miles dien? business miles? other employee expenses, ect. gas, oil, washer salvent.. tabs.