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Deducting Your Car - What Business Owners Need to Know
Although
you might hate paying taxes for the profits generated by your
business, there are a number of ways to bring down your taxable
income significantly by using all the deductions that can be used
by you. You are entitled to a number of deductions for your business
expenses. You should definitely use them so that you are able
to use the IRS tax laws to your advantage.
Before
you actually decide to deduct an expense, first confirm if
the expense incurred by you is a necessary and ordinary one.
An expense is considered to be an ordinary one if it is commonly
used and accepted in the industry that you are doing business
in. On the other hand, an expense is considered to be necessary
if it is needed and apt for your business. If you can fulfill
both these criteria, then you can get these deductions approved
by the IRS.
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| Cars
are one of the key sources used to deduct expenses for your
business. If you are using a car or more than one car for
your business, then you can easily deduct the expenses incurred
because of the car/s from your taxes. But you will need to
maintain a proper record to get the benefit of your car’s
deductions. You can maintain a log that records the mileage
of your car. Besides this you also need to keep all the receipts
that you get when you incur any car-related expenses. |
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| You
need to maintain a record of the total usage of your car for
all your business needs throughout the year. Although you
don’t need to provide any kind of documentation of your
car’s use when you pay your taxes, you may have to keep
any type of evidence that will support your claim in case
there is an audit. So feed in the details of all your car
trips that are used by you for your business needs. Keep a
track of the people you meet, the reason for the meeting,
the timing, the distance covered by your car and finally the
to and fro destination that was covered by your car for the
business meeting. |
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| You
can collect all the receipts of the gas put in your car, parking
expenses, car repairs and any other expenses related with
your car. These receipts will need to be filed by you as they
will be useful in proving your claims in case there is an
audit. |
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| You
can calculate your car’s deduction either by using the
Standard Mileage Rate method or the Actual Expenses method.
In the Standard Mileage Rate method, you need to total all
the miles traveled by you throughout the year and multiply
the same by the Standard Mileage Rate given for a particular
year when you are filing your taxes. This rate changes every
year so always choose the right rate. On the other hand, if
you want to use the Actual Expenses method for your deductions,
you have to add all the expenses that have been incurred by
you in owning and running the car. You can then break up the
sum with the percentage of time used by you for your business
needs, so that you can arrive at your car’s final deduction.
Choose the method that suits your needs. |
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Call us today at 713-661-1040 and let us put our experience in
working with dentist and medical professionals to work for you.
Protecting your bottom line is our top priority!
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Tax Preparation & Tax Accounting Articles:
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Tax Tip Of The Week!
Want to learn how to save money on your taxes? FREE tax tips each week by Tax CPA Jim Trippon:
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Individual
Tax Return Service
Individual
Tax Return Service
