The IRS Deductions Blog

Posts Tagged ‘cars’

Question: work-related Tax Deductions?

if i purchased work equipment on credit, at what point can i claim the deduction for my taxes? based on purchase date or payoff date? also, i have been told that a stolen automobile is deductible. is this true? what about child support paid out?
if i purchased work equipment (tools) on credit, at what point can i claim the deduction for my taxes? based on purchase date or payoff date? also, i have been told that a stolen automobile is deductible. is this true? what about child support paid out? my son lives with me and i provide ALL of his support. but his mother still gets a check from me every week. don’t ask me how that bass-ackwards system works

Answer: Work equipment is tax deductible if you were not reimbursed. Additionally, it depends on whether it is an “equipment” like a paper shredder or a piece of equipment like a computer; the paper shredder can be considered “supplies” so is deductible in the tax year that you paid for it.

If it’s a big ticket item like a computer, you’re better off checking with a tax accountant because businesses have to depreciate equipment whether in one lump sum or over its useful life. And it will depend on what your company’s preference is and how they amortized equipment in the past.

As for your automobile it can be deducted as a theft or loss but only up to the amount that was not reimbursed by your insurance company.

Child support is not deductible.

Items on Amazon Right Now for Tax Deduction Automobile:

Hope on four wheels

CHARLESTON — For a maximum of $5 a day — around $30 a week or $120 a month, D.C. Metro travelers can go wherever they need to go — to work, to play, all for less than half the cost of the average American monthly car payment, gas prices a complete non-issue.

Auto Donation Tax Deduction – How To Not Get Screwed!

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:

Wirtz: So, now, who is rich

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: PLEASE Help! Injured Spouse form #8379 tax question!!?

The instructions are really confusing on the IRS website. I (the wife) owes back taxes, my husband does not. He has ALL the income in 2007 and has a refund coming to him, obviously he wants it. Would HE be the injured spouse?

Also, how do I fill out Part II? What do I allocate to whom? For instance, it asks us to allocate our standard deduction (10,700) What do I put in the box for injured spouse there? Half that, or all of it? And also for number of exemptions, we are 2, does he put 1 in the allocated to injured spouse section or keep it as 2? CONFUSED! Your help would be GREATLY appreciated! Thanks!

Answer: If you do not live in a community property state and you had $0 income, you would actually put “2″ in the exemption column for your husband.

Items on Amazon Right Now for Standard Deduction 2007 Irs:

IRS Commissioner Gives Congress Ultimatum

Tens of millions of taxpayers may face delayed refunds.

To The Ron Paul -ites…on Inheritance, Fed, IRS, SS #1

Question: Estimated tax, do I have to base it on net profit or income? If I itemize for profit …?

(i.e. my income minus rent, food and travel because I stay and work in a city more than 50 miles from my hometown, for 6 months in 2010) then can I still use standard deduction when I file my 1040 for 2011 with my wife ‘married filing jointly’ ? IN that case, will my portion of the income in the 1040 be the net profit? I am on a 1099 and my wife is on a W2. Thank you to everyone who answered my last question…

Answer: Yes your net profit from the schedule C will end up on the 1040 tax form page 1 line 12 and will be added to all of you and your wife’s worldwide gross income and be subject to income taxes at your marginal tax rates after the income tax return is completed correctly.
If you are a self employed taxpayer then you are responsible for all of your own FICA self employment taxes of 15.3% plus any income taxes on your net profit from your business operation at your marginal tax rate.
You will need to report that income, and any related expenses, on Form 1040, Schedule C, Profit or Loss from the Business operation, or you may qualify to use Form 1040, Schedule C-EZ, TO determine your Net Profit from the Business operation. You will also need to use the Form 1040, Schedule SE, Self Employment Tax form to compute and report your social security and Medicare tax on the net profit from the business operation.
For instructions and forms go to the IRS gov web site and use the search box for publication 334 Tax Guide for Small Business a very good place to start with examples
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the IRS gov web site 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.

Items on Amazon Right Now for Standard Deduction For 2010:

Premier Renewable – Recommended Winding Up and Reconstruction

Premier Renewable – Recommended Winding Up and Reconstruction

Davos Annual Meeting 2010 – Rethinking Compensation Models

Question: What is the best way to file with the IRS if your married to get the most of your return?

My wife and I were wondering how we should do our taxes come tax season. Last year we claimed and file jointly and received about $3200 after we paid H an R block. This is our first time filling together (recently married) and my wife always received about $4500 from the irs because of her two girls. She makes 27,000 a year and qualified for earned income credit I guess. I make 45,000 and have to pay for a lot more taxes of course. We also own a house together as well. I claimed single this and she claimed jointly. What would be the best way to file and receive a larger refund.?

I went to the irs calculator and inputed (my) info and it said I would only have to pay $2200 if I claimed jointly???
But if you go to the tax tables (after the standard deduction) the tax rate is double or more (almost $6000). Which one is right?
Thank you in adavnce!!!

Answer: Once you are married, you no longer have the option of filing single – you can file as married filing separately, or jointly. Joint is almost always better for you as far as how much tax you pay/how much refund you get.

As a single mom she would have been eligible for EIC, but not now – someone filing as married filing separately isn’t eligible in any case, and on a joint return your income is too high.

It’s not possible for her to file a joint return and you to file separately. If you sent them in that way, you’ll be hearing from the IRS since you would have filed twice. Or more likely they’ll just reject the 2nd one they process -and they won’t catch it until a year or two from now when they finish matching up the returns to the W-2’s they got, then you’ll get an impressive bill for the tax you still owe plus penalties and interest.

To use a calculator for a joint return, you have to enter BOTH people’s info, not just one. When you file jointly, both of your info is added together on the same return.

The tax % you see in the tax tables is the % you pay on the highest dollar, not on all of your income.

Items on Amazon Right Now for Standard Deduction Calculator:

Is it time to refinance a mortgage?

Dear Dr. Don, I have a $390,000 mortgage at a 5½ percent fixed interest rate for 30 years. I have 27 years left in the current term. Is it a good idea to refinance the loan for 30 years fixed at a 4.37 percent interest rate? Closing costs will be $1,800.