Tax deductions change every year. Sometimes the amount of the deduction increases or decreases, and sometimes the requirements to qualify change and sometimes the deduction is just eliminated. One of these deductions that have changed is the business use of your car. Taxpayers who have previously used this deduction may need to look and see if they still qualify for the deduction.
Who Can Deduct it?
Individuals who own a business or are self-employed and use their vehicles for business may deduct car expenses on their federal tax return. If a taxpayer uses the car for both business and person purposes, the expenses must be split. The deduction is based on the portion of mileage used for business. The cost of using your car as an employee is no longer deductible as an unreimbursed employee travel expense. And unreimbursed employee expense is an expense that your employer does not reimburse.
How Do You Deduct It?
You have two methods for figuring out car expenses. You can either use actual expenses or you can use the standard mileage rate. If you are using the actual expenses method, you can deduct things like depreciation, lease payments, gas and oil, tires, repairs and tune-ups, insurance, and registration fees. If you use the standard mileage rate, you must choose this method in the first year the car is available for use in their business. If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. For 2019, the standard mileage rate is 58 cents per mile.
If you are deducting car expenses on your tax return, you will need to substantiate this deduction. It is best to keep some record of the miles you use for business use. There are apps out there that will track your mileage for you, or you can keep a log yourself. Having these records will help substantiate your deduction claim. If you are deducting actual expenses, keep receipts of expenses for the car. These will also help you substantiate the deduction that you are claiming. You can learn about keeping records for this deduction here.
If you are self-employed or a business owner and need help with taking these necessary business deductions, Polston Tax can help. We have tax accountants that can help you decide which deductions you qualify for and are most beneficial to you. You can get help today by calling 844-841-9857 or click below to schedule a free consultation.