What Can You Claim When Filing Your Taxes for Vehicle Use?

Filing an income tax return is a process that many taxpayers dread, but tax returns present an opportunity to claim deductions that reduce income tax liability, which can result in a refund. The IRS offers a wide range of tax deductions, including write-offs for various expenses related to business and empowerment, such as using a car for business purposes.

  1. Vehicle Use Deduction Basics

    • The cost of using a vehicle in a business to produce income or to complete tasks related to a job is a tax-deductible expense. The IRS states that all of the costs associated with operating a car for business purposes, such as the cost of gasoline, oil, repairs, insurance, tires, depreciation, licenses and registration fees are deductible. Car owners may only deduct expenses incurred when using a car for business purposes. The cost of commuting to a normal workplace is not considered a deductible business use, but the cost of driving to a second workplace and to visit clients is deductible.

    Actual Car Expenses

    • Taxpayers have two options for claiming deductions for the business use of a vehicle. The first option is to deduct the actual car expenses incurred on a tax return. Taxpayers that choose to deduct actual car expenses must keep track of all expenses incurred during business use to deduct an accurate amount.

    Standard Mileage Rate

    • Keeping track of every single car expense during a year to claim actual car expenses can be time-consuming, but the IRS offers another method of claiming a vehicle use deduction -- the standard mileage rate. The standard mileage rate is an expense rate set by the IRS based on the average cost of operating a vehicle in a certain year. Taxpayers may choose to deduct an amount equal to the total mileage a car is driven for business purposes -- multiplied by the standard mileage rate -- instead of actual car expenses. As of 2011, the standard mileage rate is 51 cents per mile.

    Considerations

    • The standard mileage rate can change over time due to changes in car expenses. For example, if the cost of gasoline rises in a certain year, the IRS might increase the standard mileage rate. For certain vehicles, such as those with very low fuel efficiency, claiming actual car expenses may result in a larger deduction than using the standard mileage rate.

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