New business owner

ChevyShine · ‎October 25, 2023

What is required to claim my vehical expenses for my new business?

GCEA · ‎October 25, 2023

Congratulation on your new business!

If you are a sole proprietorship and will be reporting your business income in your Schedule C, you can choose between two methods of reporting your vehicle expenses.

Below is summary of both methods:

Actual Expenses method - you can expense/claim expenses you actually incur while operating your vehicle for business purposes. The types of expense include:

gas
oil changes
tire
car washes
insurances
repair and maintenance
and Depreciation

You can only expense/claim the expenses based on the percentage that apply for your business use.

Standard Mileage method

This method you multiply your business miles by the amount per mile allotted by the IRS. This amount might change every year so please refer to the IRS link below for more information.

Whichever method you decide to use, please make sure you keep records of your miles use for personal and business separately and all receipts for the related expenses.

If your business is organize/structure as a corporation, partnership, or S-corporation, you must use the actual method to expense your vehicle use.

Here are some more helpful links:

Maximizing Tax Deductions for the Business Use of Your Car

Topic No. 510, Business Use of Car

Driving Down Taxes: Auto-Related Tax Deductions

Car and Truck Expense Deduction Reminders

Thank you and good luck!

carmen_t · ‎October 25, 2023

Hello and thank you for your question. I would definitley keep track of business and personal miles. The reasoning is a decision will have to be made to use the standard mileage rate based on business miles driven or actual expenses. As you can assume the next bit of info is to keep receipts and track actual vehicle expenses as well. The IRS has issued guideance on mileage log standards and Intuit even has a mileage app. I will include a link from the IRS and TurboTax that has some very good detail information.

From IRS "Business Use of Car"

From Turbo Tax "Business Use of Vehicles"

Link to QuickBooks mileage tracker app