Automobile Tax Deductions
The Internal Revenue Service (IRS) sets specific guidelines on what can and cannot be deducted for the use of an automobile. Refer to IRS Publication 463, "Travel, Entertainment, Gift and Car Expenses," and get updates on sales tax deductions for purchasing a new car, as information can change annually.
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Mileage Deductions for Business Use
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If you use a vehicle, solely for business you can deduct many of the costs of operating the vehicle. The rules and regulations become more complex if the vehicle is used for business and personal use. Refer to Publication 463 to compare your deduction based on actual mileage or standard mileage allowances to determine which method provides the best choice for deduction purposes.
Business Travel and Entertainment Deductions
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Keep a log or journal of every instance where you use the vehicle for business-related travel and entertainment. Record mileage, business clients you met with, keep receipts of gasoline purchases for verification. Follow deduction guidelines as set forth in IRS Publication 463.
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Charitable Donation of a Car
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Review IRS guidelines in Publication 423, prior to donating so you are aware of all guidelines and limits on deductions. Make sure the organization qualifies as 501(c)(3), non-profit organization. If so, they will be aware of forms to furnish so you can substantiate your auto contribution for tax deduction purposes.
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References
- Photo Credit tax form image by Kirill Zdorov from Fotolia.com
