Tax Breaks for Mechanics
Whether working as an independent contractor or based out of a retail repair garage, a mechanic qualifies for all the legitimate Internal Revenue Service (IRS) tax deductions available to any other small businessman. Not only are there obvious tax breaks for things like tool purchases, but also expenses involved in maintaining a home office where you work on business accounts. You don't want to mess with the IRS. The penalties for cheating are not worth it, however, that doesn't mean you shouldn't take advantage of every legal deduction you can get.
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Equipment
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Since tools literally are the tools of a mechanic's trade, the cost of purchasing them is a completely legitimate tax deduction. And don't forget to include the cost of larger equipment like automobile lifts and tire repair stations. The bottom line is that any tool or piece of equipment used to conduct your trade can be deducted as a business expense. Keep in mind that expensive equipment expected to last several years might require depreciation instead of a straight deduction.
Travel
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You are allowed to take either vehicle expenses or a standard mileage deduction for business-related travel. As an independent contractor, this can add up to be an important tax break. Even if you work out of a commercial garage, the cost of driving your vehicle to the store to pick up parts or even down to the local newspaper office to place an advertisement for your business would qualify. If you have a company vehicle, both the purchase cost and continuing insurance premiums are deductible.
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Home Office
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You should closely read the IRS guidelines relating to home office deductions because there is a multi-pronged screening process to calculate how much of a tax break you can claim. In general, you can deduct a portion of expenses related to your house. You figure the size of your home office in relation to the overall size of the house. The resulting percentage can be used to deduct things like mortgage payments, insurance, Internet access, phone service and utilities.
Advertising
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Advertising may or may not be a major expense for your mechanics business. Regardless, these are tax deductions that should not be forgotten. Radio, television, newspaper or billboard ads qualify. Often local businesses are asked to make prize donations to include as part of a giveaway. If giving away the product is for the purpose of having your name mentioned in conjunction with the event, that counts as advertising. Once again, peruse the website IRS.gov to familiarize yourself with the exact specifications.
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References
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