If the car is used for work, you cannot deduct the expenses, however, if used for business you can. You have two choices when in business, you can deduct standard mileage or actual expenses. Standard mile deduction is the number of business miles you drove for the year multiplied by 53.5 cents. Example; if you drove 2,500 miles for the year, you will get a deduction of $1,337.5 ie (2500) X (.535). If using actual expenses, please see the list of deductions you can claim below. Remember if you use the car for personal use also, you have to determine what percent of the time you use it for personal and what percent for business. Example; If you use the car only 20% of the time for personal and 80% of the time for business and you have yearly actual expenses of $5,000 you would deduct; (5000) X (.80) = $4,000.
Actual vehicle expensesYou can deduct interest on an auto loan, registration, and property tax fees, and parking and tolls in addition to the standard mileage rate deduction, as long as you can prove that they are business expenses. Here’s a list of auto-related expenses you might incur.
- Gas and oil
- Maintenance and repairs
- Tires
- Registration fees and taxes*
- Licenses
- Vehicle loan interest*
- Insurance
- Rental or lease payments
- Depreciation
- Garage rent
- Tolls and parking fees*
*Also deductible if you choose the standard mileage method.
