There are several ways your car can serve as a tax deduction. Work related miles can almost always be taken as a deduction. Also, miles driven to care for a rental property may be tax deductible. Even damage to your car might be written off in some circumstances. Finally, if you drive to take a work related course, go to a job interview, or to visit the doctor you may be able to deduct the miles.
Let’s take a closer look at these car related tax deductions.
Auto refinancing may not be tax deductible, but it can potentially save you hundreds of dollars. Get a free quote from CARCHEX today.
Standard Vs. Actual Expenses
The IRS provides a standard deduction for work related miles driven. For the 2015 tax year, the rate is 57.5 cents. This deduction includes all costs such as fuel, repairs, maintenance, etc. If you don’t take the standard deduction, you can deduct the actual costs. Categories to consider are:
- Gas, oil and fluids
- Auto loan interest
- Auto insurance
- Registration fees
- Lease payments
- Parking fees
How Much Can I Deduct?
100% of your expenses are deductible for a vehicle used 100% for work. Likewise, if 70% of your miles are work related, 70% of the expenses are deductible. But remember, if your employer reimburses you for miles, you can’t take any deduction. If you want to avoid extra paperwork, the standard deduction method makes sense.
Commuting to and from work does not count as a deduction. But if you drive to see a client from work or your home office, then you can deduct those miles.
For Property Owners
If you own a rental property you can deduct miles driven to and from the property for a variety of reasons such as maintenance, cleaning, rent collection, or a routine property check.
Car Damage Deduction
If your car was damaged in an accident that wasn’t your fault, you may be able to deduct some of the damages. If the other driver’s car insurance didn’t fully reimburse you, a deduction may be claimed for the difference.
Take A Course Or Go To An Interview
If your employer requires you to take a course or training, you can deduct the miles. But, the course must apply to your present job and not for training you for a new trade.
Also, your drive to and from a job interview may be deducted with the standard mileage deduction.
Medical Visits And Moving
If you are under age 65 and your total medical and dental expenses are over 10% of your adjusted gross income (AGI), you can deduct mileage from your taxes. If you’re over 65, then your medical expenses only need to be 7.5% of your AGI. The rate for 2015 is 23 cents per mile.
The same rate applies if you moved due to a new job. If the new job is at least 50 miles away from your old job, you can deduct the miles driven during the move.
Keep Detailed Records
No matter why you take a deduction, or which method you use, keep meticulous records. You want to be able to justify to the IRS the logic behind any tax savings you claim.
Auto refinancing can save you on your monthly car payment. Get a free quote from CARCHEX now.