Can I Deduct a Car or Vehicle?

Can I Deduct a Car or Vehicle?

Many businesses require the use of a vehicle—whether that is to deliver cakes, meet clients on location, or even transport customers as a chauffeur or ride-share driver! So, how can business owners maximize their deductions for the business use of their vehicles?

The answer to this question depends on a few factors, but below is the general rule put forth by the IRS:

"If you use your car only for business purposes, you may deduct its entire cost of ownership and operation. However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use." —IRS.gov

Your Requirements as a Business Owner

Our team can help you track the expenses associated with your vehicle to maximize your savings. Be aware that the IRS requires that a mileage log be kept to record all business miles driven, detailing not only the miles driven but also the date, location(s), and purpose of each trip. If a vehicle is not used exclusively for business, business owners will need to determine the percentage of business use by dividing the total business miles by the total miles driven on the vehicle in the year. Keeping this mileage log serves as proof of legitimate business use of a vehicle in case of an IRS audit.

For some, this can be quite burdensome, but it is becoming easier and easier to keep these records thanks to apps such as MileIQ or other digital mileage logs that track your trips and generate reports come year-end.

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