Table of Contents
Table of Contents
If you own a small business or home-based enterprise, you may
already be aware of the tax advantages of claiming a vehicle's
operating expenses as an allowable business expense on your
taxes. If you don't, however, read on, and you will save some
money today. Business expenses are those expenses which are
necessary to conduct business.
Expenses can include paper clips, fax machine purchases, and
even entertainment for clients. We're talking about your car,
though, so we'll go into what it takes to deduct a vehicle's
expenses from your taxed bottom line. First, the vehicle doesn't
necessarily have to be 100% business use, but your tax
deductible usage must be. You can't deduct the trip to your
grandmother's house, but you can keep track of, and deduct the
expenses associated with your business. If the standard vehicle
deduction in the year you are claiming the deduction is 50 cents
per mile, for instance, use a notebook to log the mileage you
rack up while commuting to trade shows, office supply stores,
and client meetings. At the end of the year, if you've logged
2,500 miles, your deduction will be $1,250.00.
If you use the vehicle for both business and personal use, this
standard deduction will be the easiest way to go to keep your
taxes as stress-free as possible. If the vehicle is strictly
business use, though, you can keep track of all the incidental
expenses of the vehicle, such as oil changes, fuel fill-ups,
windshield wipers, tires, etc, and deduct all of these, as long
as you keep all the deductions on the up-and-up. The IRS doesn't
think much of people who cheat on the rules.
Claiming the
depreciation of
the vehicle is a difficult task only if you don't understand how
to do it. Slowing down reading about it, you will be able to see
it for how simple it actually is. Depending upon when the
vehicle was put into business service, you can use what is
called Modified Accelerated Cost Recovery System. Under this
system, tax law gives you five years of accelerated depreciation
on the vehicle so long as it was put into service after 1986.
However, you cannot take this deduction if you use the vehicle
for business purposes less than 50% of the time. If this is the
case, use the straight-line method for your standard five year
depreciation. It'll be easier, anyway
For vehicle repairs, use actual cost method, and be sure to keep
all your receipts, because if an audit does happen, the IRS
isn't going to accept "oops" as a valid reason for not producing
proper documentation. You may also want to title the vehicle in
the name of the
LLC we form for you.. Other
examples of business expenses is our
registered agent service.
New Mexico Corporate Services
Thank you for taking the time to read our page. Beyond resource articles, we offer numerous services designed to make opening and running your company easy. We can help you form an LLC in New Mexico and acting as your registered agent in New Mexico.
