The IRS Deductions Blog

Archive for the ‘Car Tax Deductions’ Category

Question: I have a car used entirely for business. What Tax Deductions do I qualify for?

I have two cars. One is used entirely for business (other is personal). Can I depreciate the business car at the value that I bought it for? Do I deduct the monthly payments? Write off the interest? Deduct gas, car wash, new tires, etc? Or just write off the milage?

Thanks!

Answer: For business use vehicle expenses, you can use regular method (means you use actual expenses!) or standard mileage rate (48.5 cents-2007 for business miles driven). The value that you bought the vehicle for is called basis in tax term.

1. If you use actual car expenses you are able to deduct actual cost of gas, oil, maintenance, servicing, repairs, tires, garage rent, washing and polishing cost, insurance, licenses(registration and tags), and finally depreciation (plus Section 179 deduction, if applicable to you ). Fines and legal fees for parking or moving violations of traffic laws are NOT deductible.

Property Tax paid on the business use vehicle-Schedule A
Parking and tolls paid for business purpose -Form 2106. For above 2 deductions usually your tax software will guide you through.

2. If you use the standard mileage rate, you deduct a flat rate per mile! You can’t deduct any of the actual expenses, but loan interest payment. You can’t depreciate the vehicle.

3. Section 179 deduction: You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions.

http://www.cclib.lib.pa.us/irs/taxmap/pubs/p225-030.htm

4. Interest of the loan payment for business use car is deductible under any method, but not the payment! You recover your cost through depreciation.

5. A logbook kept in the vehicle showing the date, business purpose, destination and mileage of each deductible trip provides excellent evidendce in case of audit. If you have one yet, it is ok to recreate it using common sense an fair & honest judgement.

6. Finally, this is very important- REMEMBER! if you use a regular method and take depreciation (MACRS method) in the first year a vehcile is placed in service, you lose the option of ever using the standard mileage rate to compute your transportation expense for that vehicle. In order to retain the option of using either regular method or standard mileage method, you should use the standard mileage rate in the first year of business use.

if in a subsequent year, you wish to use the regular method of computing vehicle expenses, a set rate per mile for past mileage is used to reduce the remaining basis (the value you paid) eligible for depreciation. (Please check Publication 463; pages 14-16, very helpful!)

http://www.irs.gov/pub/irs-pdf/p463.pdf

Items on Amazon Right Now for Tax Deduction For New Car:

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I wonder who can provide me with the rationale for why theythink someone, anyone, is rich in America, for purposes ofdetermining where on the tax bracket chart they should fall.

Car Donation Tax Deduction for 2010, 2011

Question: Is there a special tax deduction for new cars purchased in 2009?

I purchased a new Malibu on December 30, 2009. Was there a special government incentive that involved a tax deduction?

Answer: you get to add the sales to your standard deduction, this is the only special benefit for those who are not able to itemize(Sch L)
and if you are in a state that has no sales tax, the excise tax and any based on the value of the car are are deductible

Items on Amazon Right Now for Tax Deduction Car Purchase 2009:

Globaldrive (UK) Var – Notice

Globaldrive (UK) Var – Notice

Recovery: Time Is Run Out – December 2009

Question: When you have a deductible with car insurance, who do you pay the deductible to after getting into an accident

I was in a car accident with a hit and run driver and I have collision with a 500 Deductible. So when and to who do I pay my deductible to? And who does my insurance pay their portion to; me or the repair shop for the repairs on my car??

Answer: You have to pay the deductible to your insurance company.
Usually, the insurance company sends you a check to have your car repaired.

Items on Amazon Right Now for Car Deductibles:

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My first Social Security check is due to arrive early next year, soon after I hope to pass birthday No. 62.

DSS Insurance Services Virginia Beach, VA

Question: Is tax on a new car deductible?

I heard that as part of the stimulus package tat sales tax on a new car is bought before the end of the year is tax deductible. Is this true? Any catch?

Answer: “The deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle. The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000.”

More info here: http://www.irs.gov/newsroom/article/0,,id=204519,00.html

Items on Amazon Right Now for Sales Tax On New Car Deductible:

Asia Markets: Asia looks to rate decisions, Japan GDP

With the Group of 20 major economies’ summit over, Asian markets’ focus in the coming week will turn to central-bank policy decisions and Japan’s economic growth data.

2009 Dodge Ram 1500 Truck #10325 in Mesa Phoenix, AZ 85201

Question: Switching car insurance after claiming an accident?

We got into an accident in August 2008, we didn’t have the money to pay the deductible back then, we were allowed to reopen the claim and we’re taking our car in to get fixed March 1st, but we’re also canceling with State Farm(old insurance) at the end of this month and starting with AAA on March 1st. Will State Farm cover the claim still or will they not because March 1st we won’t be covered by them anymore? Please help!

Answer: They should cover any claim that occurred at the Time you insured with them. Call your new insurance agent and ask them for advice. You should really have no problem. Good luck

Items on Amazon Right Now for Deductibles On Car Insurance:

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Auto Insurance : How to Increase a Deductible to Lower Premiums on Car Insurance