April is the time when both Spring and tax season are starting to hit their stride. While the 15th may be a day that most people see as an unavoidable consequence of living in a taxing society, it can be beneficial many different people who use their car to commute, to transport, or any other way of getting some sort of return on their taxes through a business case. We’re not professionals in tax returns by any means, and you should speak with a specialist, but we spoke with financial experts as well as scanned some of the most interesting IRS paperwork (just kidding, they’re not) to find out how you can save some coin this year. We narrowed it down to three basic categories so you can take back what’s rightfully yours.
If you operate your motor vehicle in any sort of capacity related to your employer or business, you’re able to deduct mileage at a rate of 57.5 cents per mile for the year 2016. The terms and conditions can change job to job, but generally speaking as long as you use your car in the first available year for business purposes you can deduct the mileage rate. However, you cannot use the standard mileage rate if your employer provided the vehicle.
If you purchased a car for your commute to work, chances are that most of the expenses are, unfortunately, nondeductible. There are exceptions such as commuting to a temporary work station; if you have one or more work locations that you regularly visit; or if you work from home and must travel frequently for work to other locations. Truth be told, if you can collect all your automotive expenses related to work throughout the year and then speak with a professional, you’d be surprised what they can get back for you. Our expert did mention that there are also accountable vs. non-accountable plans. If your employer has an accountable plan, you write off all your expenses because any reimbursement is included in your W-2 income and you will end up paying tax on it.
Going hand in hand with commuting costs are expenses related to commuting and using the automobile for work-related travel: depreciation, licenses, gas, oil, tolls, parking, lease payments, insurance, garage rent, registration fees, repairs, and tires. If you’re self-employed, you can deduct interest paid on a car loan depending on how much you use your car for business. If it’s 60-percent of the time, you can deduct that much. Usually, depreciation cannot be deducted, but thanks to a ‘special depreciation allowance’ if you meet the following criteria: purchased car new on or after January 1, 2008, placed the car in service for your business before January 1, 2016, or you used the car more than 50% in a qualified business use.
Currently the full-time Editorial Director and Content Manager for RxSpeed.com, & contributing writer for Scout.com. He also loves photography, videography, his Shiba Inu Mia and driving sports cars.