Small business vehicle expense tax write off?

Question

OK, so I know that I can use gas as a tax write off for my small business as long as it is used for my business, right?

What about the actual car payment?

Answer 1

There are two ways to claim vehicle expenses, standard and actual. Standard uses a flat rate per mile of business driving and requires written evidence (such as a log book, or calander showing trips made and distances). This is by far the easiest way to claim expenses and does not require the keeping of receipts for other expenses (like car washes, oil changes or gasoline). The Actual method does require you to keep all the reciepts of every expense on the car and then you still have to keep a log book of mileage to determine the percentage of business use (exceptions are given for special use vehicles like ambulences and hearsts that normally aren't used for personal trips...I don't see too many hearsts in the Wal-mart parking lot :} ). You also have to figure the depreciation on the vehicle you are using based on the value of the car the day you started using it for business. If you change cars or use several cars (yours is in the shop, so you use your husbands for a few weeks, etc.) you have to use figure all actual expenses for each car and determine business use for each car. You are also subject to recapture rules if you depreciate your car and then sell it for more than you have left to depreciate. Not a fun situation to get yourself into. The IRS also loves to audit these deductions, so make sure your paperwork is in order when you work up your numbers!

You can also take the interest portion of your car payment, but it is also subject to the percent use rule (10% business use, 10% of interest is deductable on your Schedule C). This is also true if you take standard mileage, but only for business use, not employee business use which is another matter altogether!

Answer 2

You have a choice of taking actual expenses, or taking the standard mileage deduction. If your car is used for both business and personal use, in either case you have to keep a log of all miles driven, and which were business, which were commuting, and which were personal.

Taking the standard for the business miles is much simpler obviously, since you don't have to keep track of expenses. But it might or might not give you a higher deduction than taking actual expenses.

If you choose actual, you'd prorate your vehicle expenses between business and other mileage, and deduct the portion of the expenses that applies to the business miles. You could deduct gas, yes, and also oil, other maintenance and repairs. You can't deduct the car payment, but can depreciate the car.

Note that if you deduct actual expenses, you don't ALSO take the mileage deduction. And you can't switch back and forth between methods year to year on the same car.

Answer 3

The interest on the note is a legitimate business expense to the extent that the vehicle is used for business. The entire payment is NOT deductible.

Answer 4

U can use standard deduction by using the mileage rate of $0.22 per mile + parking and toll,, or you can deduct the actual expenses like gas, repairs, interest on car payments, toll, parking and toll, tag and license fee. Standard mileage rate usually is the best option because with actual deductions, you will need receipts for all the items deducted.