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When you purchase a vehicle for work, what can you claim on taxes?

 
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DanielV01
Expert Alumni

When you purchase a vehicle for work, what can you claim on taxes?

It depends.  When you use a vehicle for work, you have two options:  standard mile deduction, or actual expenses.  For most (but not all), the standard deduction works out better for a number of reasons.  First, the government allowed a deduction of 54 cents/mile, which adds up very quickly.  Second, the calculations are so much simpler.  (Since you are self-employed there are some additional deductions you may take:  registration fees and interest payments on the vehicle.  Both are prorated to the amount you drove for your work versus other driving.  You also get to claim tolls and parking.)  

Actual expenses is more complicated.  You must have the totals of your fuel, oil, repairs, car insurance (prorated to work vs. non-work use), depreciation, and so forth (also claim the same registration fees, interest, parking and tolls as above).  High-end vehicles and high fuel vehicles could get more benefit from actual expenses, but remember that when depreciation is used up, that deduction goes away and you are not allowed to take the standard deduction once you start taking actual expenses.  However, you may take actual expenses once you have started with the standard deduction.

Here's an IRS website for Deductible Vehicle Expenses.  Very useful information.

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