Maximizing Deductions – Car & Truck Expense – LNK Tax Group
If you are self-employed, your deduction for the business use of your vehicle could reduce your tax bill by thousands of dollars! Tracking your mileage is absolutely necessary whether you use the actual expense method or standard mileage allowance for claiming the deduction.
Two Methods for Claiming the Car Deduction:
- Actual expense method
- Mileage allowance method.
Actual Expense Method
Keeping a mileage log showing the date, starting location, ending location, business purpose of trip, and miles traveled, you should also save any receipts for repairs and maintenance, oil, gas, tolls, and any other documentation prove the car expenses you deduct. Estimates are not acceptable to the IRS, unless uncontrollable events happened but even then, there is no guarantee.
At LNK Tax Group, we maintain a depreciation schedule to support your depreciation deduction. Your depreciation schedule should include:
- The date the vehicle was placed in service
- Its depreciable basis
- A description of the vehicle
- The depreciation method
- The convention used
- The recovery period
Mileage Allowance Method
If you use the mileage allowance method to deduct car expenses, you must maintain a mileage log as well as maintenance receipts showing the odometer readings and photos time stamped on the odometer periodically (pro-tip).
Tax Savings Range:
depends on the business use of the vehicle
At LNK Tax Group, we pride ourselves on making sure you have the most amount of money in YOUR pocket (legally, of course). Maximizing your deductions can be difficult so book a free 20 minute consultation with LNK Tax Group and let us help so you can focus more on your business.
Disclaimer:To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Always seek advice based on your particular circumstances from an independent advisor.