Newsbreak: Slash Your Car Expenses with Tax Deductions – A Must-Know Guide for Business Owners!

Owning a car can be expensive, both in terms of the initial investment and the ongoing costs of maintenance. Fortunately, there are ways to offset these expenses with tax deductions. One option is to use Section 179 of the IRS code, which allows for the cost of certain types of property to be written off as a business expense. According to Block Advisors on April 20, 2022, to qualify for this deduction, a vehicle must weigh less than 6,000 pounds, be financed and used for business before December 31, and be used for business at least 50% of the time. The deduction limit for 2021 was $26,200 for vehicles in the “heavy” category 1.

Another option is the vehicle sales tax deduction, which can be claimed by saving receipts and deducting actual sales taxes paid or by using IRS sales tax tables. However, The Balance on April 16, 2022, states that the deduction only applies to sales tax rates that match the general sales tax rate. Supporting documentation should be kept to verify all expenses claimed on tax returns, including a log of all trips taken in the vehicle for business purposes and car loan payment records. While parking and tolls cannot be included in the auto loan interest deduction, receipts can be kept as supporting documentation.

Both Section 179 and the vehicle sales tax deduction are valid ways to reduce the cost of owning and maintaining a vehicle for business purposes. It’s important to keep detailed records and supporting documentation to verify all expenses, should questions or an audit ever arise. With these deductions, owning a car for business purposes can be a more affordable option for many individuals and companies.