As with all tax write offs, keeping good records throughout the year is very important. If you use your vehicle for personal and business purposes, make sure to record the miles you drive for business reasons. The easiest way to write off your vehicle expenses is using the IRS standard mileage rate that is currently 58 cents in 2019. The other way to write off your car expenses is to deduct your actual expenses.
Which is better for you? And why would you choose which option? Let’s talk about that next.
If your business requires you to drive a lot making deliveries or running a lot of errands, mileage deduction is usually going to be your best option. Many businesses find themselves driving more and more these days. Food Delivery services are in higher demand than ever. Most household items are easily delivered these days and most people are taking advantage of these services.
On the other hand, if your vehicle isn’t fuel efficient or needs a lot of costly maintenance, you might get a larger deduction by using your actual expenses instead of the IRS mileage rate.
Another great tax deduction that might not occur to you is making a vehicle donation. If it’s time for a new vehicle, why not take advantage of donating it to charity and getting the value as a tax write off? There are organizations that will actually handle all of the work for you. Great companies such as Cars2Charities will also make it so the organization you choose to receive the donation, also doesn’t have to do any of the work. They also clean up your vehicle before it sells to make sure it’s worth the highest amount possible.
As always make sure to speak with a tax professional with any questions regarding filing your taxes. We’re happy to talk with you on how to record writing off your vehicle expenses or donations in your bookkeeping software.