How to Deduct the Business-Use of Your Car this Year

Many business owners and employees have to use a personal car for business purposes, and luckily it’s quite simple to claim these as business expenses following IRS regulations. In order to do so, it’s paramount that you keep accurate mileage and depreciation records. If you’rereading this thinking, “Oh no, I haven’t kept track of any of that this year.”You may have to wait until next year, but you have the ability to begin your record keeping soon, on January 1.

If you use your car for only business purposes, you can deduct its entire cost of operation, with some limitations discussed below. If you use your car for both business and personal purposes, you may only deduct the costs from business use.

In both cases, everything must be documented and strictly business-related. Keep reading for more on this to get started and be sure to consult with a tax advisor. Each individual business situation is unique and can be very complex, so expert advice will definitely help ensure you are following all the rules correctly.

Keep Detailed Records

The IRS is very detail-oriented, and they expect you to be the same. Keep a record of all your expenses and business miles that you want to write off with a vehicle expense log. You can pick one of these up at most office supply or stationery stores. There are also a number of apps available for mileage tracking that will do it for you.

Items to support the deductions you claim include receipts, canceled checks, and bills. For each business trip in the car,be sure to log the date, miles traveled, destination, and the purpose, such as whether it is for business, personal use, or your commute. It’s best to have a car with great MPG,because there is a standard deduction per mile. For more information on record keeping, you can check out Topic No. 305 from the IRS.

Standard Mileage Rate

The IRS allows self-employed individuals and employees to use a standard mileage rate when submitting business claims.To use the standard mileage rate for a car, you must own or lease the car and use it in within the first year of your business. It’s fairly simple to track your total mileage for the year–write down the odometer reading of the first day you start using the car for business purposes and on the day the year ends.

Business miles include anything actually driven for business, such as visiting a client, going to the bank, or meeting with an accountant or lawyer. All of this counts towards your deduction, as well as the cost of parking fees and tolls you pay for the business.

If you’re self-employed, you can deduct your car loan interest that’s related to the business use of the car. Commuting time and running personal errands is travel that is not considered business related. For the most up-to-date standard mileage rate, check out Publication 463 from the IRS.

Actual Vehicle Expenses

The other method for claiming your personal car for business use is called the actual expense method. To utilize this, you must determine the actual cost to own and operate the car for business purposes. This includes gas, oil, repairs, insurance, licenses, tires,registration fees, and lease payments from the total business miles driven.

Depreciation

Depreciation is the amount you can deduct overtime for standard wear and tear the vehicle obtains over time. If you use the standard mileage rate, you cannot deduct depreciation on the vehicle,unless you use your car for 50% or less for business reasons.

Typically, the Modified Accelerated Cost Recovery System is the only method that can be used if your car was placed in service after 1986, but be sure to check with a tax advisor. Depreciation can be a very complicated subject and you want to make sure you are doing it right for your business. For more information, refer to TopicNo. 704 from the IRS.

Ownership

Knowing the different types of car ownership will help you determine how to claim your car for business use the correct way. A sole proprietor or self-employed owner is one that is a single-member LLC and files a Schedule C their personal tax return. Like this,you can choose to use either the standard mileage rate or actual expense method.

An S Corporation/C Corporation requires a vehicle used for business to be owned by the corporation or by an employee. The method of claiming the deduction will depend on this ownership. If the vehicle is owned by an employee or a shareholder-employee, they can submit a request for reimbursement to their employer based on their documented business miles.

Typically, the corporation or business can then reimburse the employee based on the standard rate. It’s also generally easier for a business to allow an employee to use their own personal vehicle for work and submit an expense reimbursement request. This puts the responsibility of record-keeping on the employee, which saves time and money for the employer.

Sam Casteris is a small business owner and freelance writer operating out of Phoenix, AZ. You can find more of her work on Contently.

3 Ways the Internet Can Make Your Life Easier

Are you someone who uses the Internet in some capacity or another? If so, include yourself among many people nationwide doing the exact same thing.

That being the case, the amount of Internet usage of course varies from person to person.

Someone who meets a lot of people on a regular basis can use the worldwide web to get more information on them.

In conducting a background check, you learn more about each person you meet. So, are you ready to have the Internet play a role in making your life easier?

Put the Worldwide Web to Work

Remember these three ways to put the worldwide web to work for you:

  1. Searches before meeting people

As mentioned, doing online searches can benefit you in ways you might never have known before.

For instance, are you getting back into the dating world? If so, you want to make sure that the person you agree to go out on a date with is who they claim to be.

A fair number of people behind computers are not always honest with those on the other end of online dating. As a result, the latter can be victims in more ways than one.

When you do a background search of the person you are contemplating going out with, you are more informed. By knowing their name, you can plug that into the computer and start searching away.

Another example would be if you are considering rooming with someone.

As many Americans look to save money these days, the idea of having a roommate or two has picked up.

Once you have a potential roommate’s name, do a quick online search of them to make sure they check out. In doing so, you will feel better about your decision to go with them or move on to someone else.

  1. Securing your family

When you have a family to protect, you will do anything it takes to keep them safe and sound.

With that in mind, you can use the Internet in more ways than a background search to protect them. As valuable as that search is, it can’t help your child when he or she is sick or injured (see more below).

That said medical emergencies with kids do not always come at the best times of the day. As a result, you can’t always get in touch with your family doctor.

There are online medical sites offering basic tips to care for a child with various symptoms. As such, you can make them more comfortable until they can get in to see your doctor.

Such online information can also prove quite valuable in a medical emergency. Sites provide info on dealing with everything from the flu to if your child ingests poison.

By using the Internet at a moment’s notice, you could improve your child’s condition, even save their life.

  1. Knowing your rights following a vehicle accident

Unfortunately, many American families will be in vehicle accidents this year. With that being the case, it is important to know where to turn for both medical and legal help.

When it comes to the former, those injured in your family may need long-term physical rehab to recover. Countless medical facilities offering services in the rehab business are online with informative websites waiting to assist.

Once you have done some searches of those in your area, you can whittle them down. From there, decide which one best suits the needs of the person or persons requiring them.

With your legal rights, what happens if a family member is in a serious accident where the driver leaves?

With a hit-and-run accident, you could end up footing the bill. That is unless you get their license plate and/or have an eyewitness.

In a license plate lookup following a vehicle accident, you can pin down a responsible party.

When it comes to the Internet, these examples are but a smidgen of how the web can make your life easier.

About the Author: Dave Thomas covers business and technology topics on the web.