If you run a business and use a vehicle for business purposes, you need to make sure that you understand how to represent your driving on your taxes. Here are four things you need to know about representing the driving you do for business on your taxes.
#1 Tracking Mileage
If you use your vehicle exclusively for business, you can write down the mileage at the start of the year and the end of the year to calculate your mileage.
However, if you use your vehicle for business and for personal use, you are going to want to keep a mileage log. Write down the date of your trip, where you are going, the purpose of your trip, and the mileage that you drove for that trip. It is best to fill this log out each time you drive your vehicle.
#2 When Your Mileage Starts
You need to make sure that you are tracking the right mileage. If you work from an office, your mileage does not start until until you leave your office. If you leave from your home and drive to a business meeting, you can't start keeping track of your mileage until after your first business-related stop; that stop serves as the starting point for your mileage for the day.
However, if you work from home, your business mileage starts the moment that you pull out of your driveway until you get back home at the end of the day. Since your office is based at your home, literally all driving that you do for your business counts as tax-deductible driving.
#3 Keep Track Of Other Driving Expenses
Third, you need to make sure that you keep track of other driving expenses as well. That means keeping a running record of all parking fees and tolls that you have to pay when you are driving for business purposes. You may want to download an app that will make it easy for you to keep track of these expenses. Or keep a chart or binder in your vehicle where you can note these expenses and put your receipts when you pay tolls or parking fees.
#4 Document All Repairs
Fourth, keep track of all repairs that you make to your vehicle. These repairs could be deducted from your taxes. If you use your vehicle for business and personal usage, you'll need to figure out, based on your mileage, how often you use it for business and personal usage. From there, you can deduct that percentage of your expenses.
For example, if you drive 20,000 miles a year, and drive 15,000 miles for business purposes, then 75% of your driving is for business purposes. If you paid $3,000 in repairs for your vehicle last year, you can deduct $2,250 or 75% of the $3,000 from your taxes as a vehicle-related expense.
Be sure to go over your mileage and vehicle-related deductions with your tax specialist to ensure that you have everything documented and calculated correctly. Contact a firm like Carmines Robbins & Company PLC to learn more.Share