Tax Deductions for Train & Engine Service
The force between the power train and engine in a vehicle can cause wear and damage to gears, causing vehicle owners with damaged components to pay service costs to repair or replace these components. Taxpayers can take federal deductions for drive train and engine service and repair expenses if they use their vehicle for business purposes.
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Eligibility
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A taxpayer must need his car fixed to carry out business activities for him to take a tax deduction for repair of his power train or engine. Similarly, an employee who must travel outside his local area for work on a temporary basis must need the vehicle to find or maintain employment to deduct repairs. An employee who uses his own vehicle to perform tasks at the request of his employer can deduct most of his expenses if he does not receive compensation for the employer’s use of his vehicle.
Limits
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A taxpayer can take a full deduction for train and engine service only if he uses the vehicle exclusively for business use, because the federal government does not allow deductions for personal use that contributes to service costs. He can calculate his deduction by taking his repair costs and multiplying them by the percentage of time he has used the vehicle for business purposes over the lifetime of the vehicle.
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Reporting
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Vehicle owners must keep records of their power train and engine service expenses to claim them on their federal tax return, including a receipt or sales slip that proves their purchase of repair services and a record of the time they have used the vehicle for business. Small business owners can claim a deduction from gross business income on Line 8 of IRS Form 1040, Schedule C, while employees can deduct their repair expenses from adjusted gross income by filling out IRS Forms 2106 and 1040, Schedule A.
Warning
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While the cost to service a power train or engine can costs thousands, taxpayers qualify for up to an $11,600 standard deduction dependent on their filing status, as of the 2011 tax year. Since employees cannot take a deduction for vehicle repair costs and the standard deduction in the same tax year, those with few deductions other than their repair costs usually receive fewer tax savings than taking the standard deduction. Since small business owners can deduct their repairs as a business expense and still take a standard deduction, they should always deduct these costs.
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References
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