Deducting Automobile Expenses From Your Taxes

Thousands of tax payers each year miss the opportunity to claim their automobile use as a deduction on their taxes. At BTL & Company, P C, Tax & Accounting, we help many Americans claim those deductions that they are due. If you are not sure how you may qualify for this money saving deduction, find a tax professional in your area who works with mileage and vehicle deductions. A skilled accountant or tax preparer can find all of the hidden money you may have missed.

What is a Deduction?

• A tax deduction sounds like a negative, but it is really a way for you to save money on your owed income taxes. The amount of taxes that you are required to pay the government each year is determined based upon your income. Claiming a deduction, which is an expense that you have paid, lowers your total income. When each of your deductions is applied to your earnings for the year, the resulting total is your adjusted gross income. It is financially better to have the lowest adjusted gross income possible, to either pay lower taxes or receive a larger refund.

When are Automobile Expenses Deductible?

• Using your vehicle for personal events does not qualify the cost or expense as a deduction. To claim an automobile deduction through the Internal Revenue Service, your vehicle has to be used for business purposes, medical purposes, charitable purposes, or for relocation.

Using Your Vehicle for Work

• Simply driving to work and home each day does not count as an automobile expense or deduction. However, if your place of employment has you traveling between different locations, that is applicable. Also, if you work for an employer out of your home, you may claim trips that are made away from home for business meetings and the like.
• The only time commuting to work counts as a deduction is if you are employed with two part time jobs and must travel between those two jobs each day.

Using Your Vehicle for Medical Reasons

• If you are a tax payer who must travel for medical reasons, this is often a claimable deduction. Having to travel to doctors offices and hospitals, for your own care or the necessary care of your dependent will earn you a deduction on your tax refund.

Using Your Vehicle for Charity

• For tax payers who use their own automobile to get to and from charitable events, this is deductible. If your personal vehicle is used by the charity, this is also completely deductible.

Using Your Vehicle to Relocate

• If you have relocated because of a new job, and the move was more than fifty miles from your precious home, the cost of moving your automobile is deductible. If you had to drive the automobile yourself, those expenses would qualify as a part of this deduction.

What Are the Qualifying Expenses?

• Not every expense you might accrue on the road is deductible. In fact, tax payers must understand that tickets and fines received while driving are never considered deductible. Even if that ticket happened when your employer made you drive from one office to another.
• Parking fees and tolls, vehicle registration costs, property tax on the vehicle, and insurance premium costs are all deductible automobile expenses.
• If you have a loan on your automobile, the interest on that loan may be claimed. You can also deduct any money you spend to lease or rent a vehicle for the above reasons. The depreciation of your personal vehicle is claimable as well.
• Your fuel or gasoline expenses while driving for business, medical, charity, and relocation are deductible. As are any repairs or routine maintenance that you pay for the vehicle to have during the year.

Should You Claim Standard Mileage?

• Unfortunately, you cannot claim automobile expenses as a deduction and claim your mileage at the same time. You must choose which one will benefit you the most. For many people, this can be tiresome, as there are many numbers to crunch and receipts to keep. Work with an accountant or tax preparer to determine which option will give you the best results.
• If you decide that you are going to focus on your mileage over expenses, that decision needs to be made early on. Once you select the expense route, you may not switch to mileage the next year.
• According to the IRS, the current mileage rates are as follows:

                Business use-                     $0.54 per mile

                Medical use-                      $0.19 per mile

                Charitable use-                  $0.14 per mile

                Relocation use-                 $0.19 per mile

• Selecting the mileage option will still allow you to claim any business related fees for tolls and parking. All other expenses become null. The benefit of selecting the mileage deduction is that you do not have to retain nearly as many receipts.

Where Do You Claim Automobile Expenses on Your Tax Return?

• Where your automobile deduction is claimed on your income taxes will be determined by how you are filing and which automobile expense you are claiming. Find a tax professional to walk you through the reporting process correctly.

My name is Beriso Tusse, and my team at BTL & Company, P C, Tax & Accounting are standing by to assist you with all of your automobile tax considerations. You work hard every day, and so does your vehicle. It is only fair that you get something in return for all the time you spend on the road. Find a tax preparer who understands all of the qualifying deductions and receive a better tax refund this year.