Business Builder Blog
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5/28/2015 Deducting Your Vehicle For Business UseThe vehicle tax deduction is huge for Realtors, as you drive a ton of miles for your work. So what exactly should you be tracking for this deduction so that you aren’t wasting your time, but also have what the IRS needs? ..... Any time you take a deduction for business use of your vehicle, you can either take the standard mileage method, or itemize actual expenses. You do not do both. 95% of the time, the standard method gives a better deduction, and it’s much easier to deduct/track. If you deduct actual expenses, you aren’t deducting the total expenses like most think, but only the business percentage (similar to that of a home office). So if you spend $10,000 on vehicle repairs, gas, etc. and only drive your car 25% for business...then $2,500 would be deductible. This would likely be a much smaller figure than the deduction for actual mileage. At 57.5 cents per mile, you’d only have to drive 4,350 miles to get that same $2,500 deduction...and Realtors usually drive MUCH more than that. HOW YOU CAN USE THIS: If you choose the standard mileage method, you just need to keep track of mileage and a few other pieces of info. Don't waste your time with all the gas receipts and repair logs, etc. We have a helpful worksheet for you on our website that will assist you with this. We also have a mileage log you may want to keep in the event the IRS questions your deduction. Click here to access these resources! There are some additional considerations to ask your tax preparer - for instance, if you've claimed actual expenses for a vehicle in past years, you can't just arbitrarily switch to claiming standard mileage. Contact us with any questions...we’re here to help! Comments are closed.
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