Did you know that you can deduct the entire cost of ownership and operation of a car if it is used only for Business purposes? That’s right! Although, if the car is used for both business and personal purposes, you can only deduct the cost of its business use. You can usually figure out the deductible of your car using one of these two methods…
Standard Mileage Rate Method
First, find your current Standard Mileage Rate using Publication 463 (2021), Travel, Gift, and Car Expenses
or search for your rates on IRS.gov. To use this rate, you must own or lease the car and…
- You must not operate five or more cars at the same time (aka fleet operation).
- You must not have claimed a deduction depreciation for said car using any other method besides straight-line.
- You must not have claimed a section 179 deduction on said car.
- You must not have claimed a special depreciation allowance on said car.
- You must not have claimed actual expenses after 1977 for the car you lease.
If you choose to use this method, you must use it the very first year the car is available for business use. After the first year, you can choose which method you will use (standard mileage rate or actual expenses).
Actual Expense Method
If you choose to use this method, you must find out the actual expenses that you are incurring for the car to operate for its business use. This can include things such as gas, oil, and repairs.
For more information on the business use of a car, follow this link or call us at (855) 261-1251. We are the proven tax attorneys you need to maximize your business deductions while staying on the right side of the IRS.
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