Vehicle Deductions: Using Your Vehicle for Business Purposes

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February 15, 2014

1800Accountant

Driving is something many of us do without even thinking much about it. From sedans to SUVs to trucks, we all need to get places every day. We also put up with the numerous costs of driving and maintaining a car that add up over time. But if you spend time on the road for business purposes, have you considered the tax deductions you could enjoy when it comes to your vehicle?

The vehicle deduction is commonly overlooked. To qualify for it, you must use your vehicle to travel for business purposes. There are two basic ways this can be interpreted. You can drive your vehicle from your place of employment to another location to meet with a client or conduct some kind of business. If you have a home office, you can drive from your home to another location where you would be conducting business.

There are two different approaches you must choose from to take advantage of the vehicle deduction. You can either make this deduction based on miles driven or actual expenses. If you take the mileage approach, the standard mileage rate is set at 56.5 cents per mile driven for tax year 2013. If you use the actual expenses method, you can include gas, oil changes, tolls, vehicle repairs, maintenance, and insurance in your deduction.

In addition to deductions for vehicles used for business purposes, there are tax breaks available for donating used vehicles to qualifying charities. If you have an old car that is valued at less than $500, the tax deduction amount is determined by a donor’s estimate of the vehicle’s value. For vehicles valued at over $500, donors must obtain a written acknowledgement from a charity to include with their tax returns. Donors must also use itemized tax returns rather than taking a standard deduction. There are specific rules each charity has on the condition of a vehicle before they can accept it as a donation.

Resource Provided by: 1800Accountant

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