Ryan VaughnCOO of Incite Tax & Accounting. Ask me anything about your taxes.

Car Tax Deductions - Part 1

12 Jul 2023 · 1 min

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In this instructional video segment, the speaker explains how business owners can deduct vehicle costs on their taxes using the two methods permitted by the IRS. The first method is the actual expense approach, which allows deduction of all out‑of‑pocket costs such as gas, tires, oil changes, car washes, insurance, registration, and interest on a car loan. The second method is the standard mileage deduction, where the taxpayer multiplies the number of business miles driven by the IRS‑published mileage rate (which changes annually). The speaker illustrates the mileage method with a simple example: at a rate of $0.56 per mile, 10,000 business miles yield a $5,600 deduction. The content serves as a concise guide to understanding and applying these two vehicle‑deduction options.

Chapters

Can I deduct my car for taxes? And if I can deduct it, how do I actually do that? The IRS has 2 ways in which you are able to write off vehicle use in your business. Either actual expenses. Actual expenses will include the gas, if I get new tires, windshield wipers, oil changes, car washes, insurance, vehicle registration. If I have a car loan, the interest on the car loan. All of that would be actual expenses. Or the other option they give you is just a simple calculation of a mileage deduction. You take the miles you drove, the business miles you drove, and multiply that by the IRS mileage rate. They change the rate every year, so look it up. But let's say it's 56 cents a mile and I drove 10,000 miles. I'd take 10,000 times it by 56 cents. My write-off would be $5,600.