The IRS Deductions Blog

Archive for the ‘Car Tax Deductions’ Category

Question: Tax Deduction?

Ok i deliver pizzas for a living and i herd that i can get Tax Deductions for using my car for the company and the miles i go? Anyone know anythang about that?
1. depending on gas price right now a $1.05

2. Credit card tips are automaticley reported… but not cash tips
***sorry they dont pay per run but everytime i leave the store 1.05

Answer: You can claim 48.5 cents per mile as far as using your vehicle when delivering pizzas (business use). But if the company gave you some money for mileage then you can not take the full 48.5 cents. You will need to complete a 2106 form (employee expenses not reimbursed by employer) and attached it to your 1040. The mileage rate for 2008 is 50.5 cents per mile. Hopefully, you have good records to prove your mileage in case the IRS contacts you. You also need to report the cash tips as well.

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Question: What is the deductible portion of a vehicle registration fee?

In Indiana and other states, you can deduct the vehicle registration fees that are based on your vehicle’s value.

Answer: In Colorado, you can only deduct the tax portion of the registration fee, not the administrative fees that are added on to your annual registration renewal – usually, it is identified on your auto registration that you keep in your car.

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Question: How do you go about filing a one time tax deduction for a vehicle?

I started a company but purchased the vehicle before I got the actual LLC. My vehicle is used for my business and I wanted to file for a one time tax deduction for using it. Help….

Answer: Your LLC must own the title to the vehicle. Can you refi with you as an individual personally guaranteeing the business will pay? You can still do mileage in a car your LLC doesn’t own.

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Question: Do I need to keep paper receipts for Tax Deductions?

I own my own business and have been getting and keeping paper receipts for purchases that I plan to deduct as business expenses. Recent reports are saying that paper store receipts contain high amounts of BPA, a harmful chemical. I use my debit card most of the time to make purchases. Is my bank statement good enough for proof of purchase or do I have to keep getting these receipts because I would prefer not to touch them.

Answer: Good records will help you ensure successful operation of your new business. You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.

All of your gross income from all sources of worldwide income will be reported on your correctly completed 1040 federal income tax return.
In general, taxpayers may deduct the ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
The independent contractor self employment income will be reported on the schedule C of the 1040 tax form and you will be responsible for the 15.3% of the social security and medicare tax on your net profit from the business operation you also may need to make some quarterly estimated tax payments for the tax year 2010. The last payment would be January 18 2011.
You would have to be sure that you handle your business deductions correctly for your business operation.
For instructions and forms go to the IRS.gov website and use the search box for publication 334 a very good place to start with examples.
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the www.irs.gov website for Small Business and Self-Employed Tax Center
Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.
2 of the seven tax tips for starting a business enclosed below.
#4 Good records will help you ensure successful operation of your new business. You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
#7 Visit the Business section of the IRS gov website for resources to assist entrepreneurs with starting and operating a new business. Go to the IRS gov website and use the search box for the below referenced material
*Starting A Business
*Operating A Business
*Closing A Business
*Publication 4591, Small Business Federal Tax Responsibilities (PDF 470.1K)

http://www.irs.gov/

http://access.wa.gov/business/taxes.aspx

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