Automobile Expenses - Tax Write-Offs

Arizona Truck Accident Attorney - Automobile Expenses - Tax Write-Offs

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Automobile Expenses - Tax Write-Offs

If you use a vehicle for conducting business, you can deduct sure automobile costs from your tax bill. This is true even if you use the vehicle for personal and business needs.

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Arizona Truck Accident Attorney

Automobile Deductions

The powers that be have historically written sections into the tax code promoting business activities. One of the customary write-offs has all the time been the expenses associated with using a vehicle for business purposes.

The simplest automobile write-off situation is one in which a vehicle is used entirely for business. For example, if you have a van used for a delivery assistance and nothing personal, all expenses associated with the van can be written off. This is known as the exclusive use situation. For many small businesses, however, a vehicle will be used for both personal and business reasons.

Where you use a vehicle for both personal and business reasons, you can only deduct expenses associated with the business use. Keep in mind that driving to and from work is not considered business mileage, while driving from an office to meet a client is considered business mileage.

There are two methods for determining deductible automobile tax expenses. The first is a uncomplicated calculation known as the thorough mileage deduction. The second is the actual expenses method. You can choose whichever deduction provides you with the biggest deduction unless you lease the car. With a lease, you must use the thorough mileage deduction.

The thorough mileage rate deduction is a calculation wherein you multiply your total business mileage for the year by a outline provided by the Irs. For the first eight months of 2005, the outline provided by the Irs is 40.5 cents per mile. For the last four months of 2005, the outline has been bumped up to 48.5 cents to reflect high gas prices.

The actual cost charge option is exactly what it sounds like. It is the actual cost associated with using the vehicle for tax purposes for a singular tax year. Automobile expenses will contain gas, tires, repairs, oil changes, registration costs, licensing, insurance and so on. In many cases, the actual charge deduction will end up being larger than the thorough mileage deduction.

Regardless of the recipe you choose, you must document the expenses you hope to write off on your vehicle. This means keeping a mileage book and receipts of anything you intend to deduct.

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