Can I deduct my car down payment and following payments if the car is used mainly for work?

Question

My company requires a car in good condition as a condition to be employed. Can I deduct my down payment and montly payments from my taxes?

Answer 1

If you are using your car for business purposes, you can deduct the usage in one of two ways: actual expenses or standard mileage. With the standard mileage method, you record the miles driven for business purposes multiplied by the standard business mileage rate for the year on your tax return. The standard mileage rate encompasses depreciation, fuel, repairs, wear & tear on the vehicles. The actual expenses method allows you to take depreciation on the purchase price of the vehicle along with the interest paid on the loan, fuel, repairs expense, etc. However, you must keep a record of these expenses. Many times, the standard mileage method gives a comparable deduction with the only requirement being a record of the miles driven.

Answer 2

If you are using your car on a daliy basis, while you are clocked in at work, then you can deduct your mileage (you can deduct wear and tear, depreciated value - if it's paid off - and other expenses, but it's milage or the other, not both). you can not deduct your travel to or from work unless you live a certain number of miles away from your job. It is more cost effective for you to claim your mileage than the actual expenses. at this minute, the federal amount is .485 cents per mile... it averaes very well if you do any kind of driving. As for deducting your payments, you can't deduct enough to really make a difference (again, mileage is more cost effective), and your car insurance you have to carry by law anyway, so you can't deduct it. The best way to do it, is to contact a tax advisor or accountant in your area, and they will be able to tell you exactly what you can and can't deduct.

Our company reimburses us the amount we drive based on the federal amount at that time, and then the company deducts the costs that they can deduct, it makes our taxes much easier.

hope that helps, good luck!!!!

Answer 3

You can take expenses associated with using your car for business such as interest, depreciation, gas, etc. OR .445 cents per mile. For many smaller cars the .445 gives you a larger deduction. You must keep writen records either way, so sharpen your pencil and go to work. Take the larger of the two.

NO you can't deduct the down payment or monthly payment. That expense is calculated from depreciation and interest that you pay on your loan (if any). The .445 cents for milage also takes payments into consideration along with gas, etc. so again, you still can not deduct them.

Answer 4

it all depends on the dealership you go to. I'm sure that most will accept a credit card. The more you put down, the less you will have for monthly payments. With a $2,000 limit it sounds like you're just getting started with having credit. If you want to work on getting a better rating and limit, definitely use the credit. But don't pay the credit off all at once. Make all the payments on time and send in more than they require for a monthly payment.

Answer 5

there are ways to deduct car expenses. I used to be an independent contractor that filed 1099 form. I was able to deduct and depreciate. HOWEVER, I also made sure through my accountant that the deductions were legal. Check with an accountant before you just start deducting any expenses. If you make an error the error(s) could be costly in penalties.

Answer 6

www.IRS.gov
forms, schedules, instructions - and search section

Questions:
Do you receive any reimbursement for your expenses from your employer?
Do you have that requirement in writing - the IRS will need that?

Do you take clients in your car?

You may not deduct personal car expenses for commuting - going back and forth to work - ever.

That's why if the company gives you a company car - at least 10% of the expenses are considered personal to you because commuting expenses are not deductible.

GOD bless us always.
CPA-retired

Answer 7

Only if the car is purchased by or ownership registered to a legitimate business can you deduct mileage, maintenance and/or fuel costs on your taxes---and that's ONLY if you can provide documentation (billing invoices or purchase receipts) that such costs came out of your pocket, can you even think of submitting such deductions to the IRS.

It's a stretch, but you might can try submitting records where your business company reimbursed you for such expenses and aim for some degree of IRS tax deduction.

We all have heard about the people who gave their car a person's name--complete with a "valid" birth certificate and Social Security Number--and got away with the usual dependent child tax deductions. More likely, such stories are stuff of urban legend.

Who would be so stupid today to try such a thing? However, given the massive human see we share this planet with, I wouldn't be surprised just how far people will go to scam the IRS.

Answer 8

Publication 17 (2006) Your Federal Income Tax for Individuals

chapter 26
Car Expenses and Other Employee Business Expenses

Car expenses. If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1.

Answer 9

You might be able to deduct the cost of the car, but you'd have to depreciate it, not just claim the down payment and the payments.

Answer 10

NO!!! This falls in the same catagory as: If you have small kids, the place of employment wants to be assured you have a dependable babysitter. The car has to be leased or purchased by the business. If you use your personal car to make errands, see customers or the like for your job, you can deduct mileage. But just to be sure you have dependable transportaion to work, no. In some states(TX being one) you can take the sales tax off for large purchases such as that. Hope this answers your question.