Posted on 03/10/2022 8:54:55 PM PST by hapnHal
To write off the cost of driving for work, you can apply the IRS per-mile write-off to the number of miles you put in. The alternative is to deduct part of your actual driving expenses. That would cover not only gas but also a percentage of maintenance, repairs and new tires - the whole shebang.
It takes more record keeping, but it might give you a greater deduction.Do You Have a Choice?The IRS usually gives you the option to choose whichever method works best for you. In some cases, the rules won't let you take the per-mile deduction.
For example, you have to use actual expenses if your business uses five or more cars at the same time. The way you write off or depreciate the cost of the car may also require you use actual expenses. The details are in IRS Publication 463.What's Legally Deductible?
Using the actual-expense method, you can write off a share of everything you spend on your car. That's more than the obvious ones, such as gas, repairs and maintenance. It also includes insurance, interest on your auto loan, property taxes and vehicle registration. Additionally, you can claim parking fees and tolls related to work. The per-mile rate excludes your expenses, except for parking and tolls.
(Excerpt) Read more at smallbusiness.chron.com ...
Whatcha gonna do? Gas is over $6.00/gal
The per mile rate includes 26 cents per mile for depreciation, and you can also include the interest portion that you pay on the loan.
Most of my clients track their mileage, and I barely am able to get them to do that.
If your vehicle gets less than 20 mpg, it is usually better to claim depreciation plus expenses.
The IRS always come asking for documentation, so be prepared to keep track of your business drives and the who, where, when and why for each trip.
This spins my head right round baby right round…can our tax system be any more. complicated? I’m curious to know what other country’s income tax systems look like compared to US.
That rate is favorable for those who have lower cost and/or completely paid off vehicles.
Actual expense method is probably better for those with high payments or recently purchased vehicles.
Gotta crunch the numbers before choosing...once chosen, you're stuck until the next vehicle.
The trick is to own 2 cars if you can. One for bizness, one for personal. Makes the paperwork a lot easier.
I wouldnt.
Hay prices are going up. :)
Daily maintenance of those guys to stay healthy take a chunk of time too.
I get a feeling most people are going to be reducing their driving significantly.
One of my clients is Doordashing and Ubering in a car from 2010. Well maintained and looks good, but he gets no love from Uber/Lyft.
He doesn’t care. Driving - and writing off - about 14,000 documented miles a year is a win for him.
But most of my rideshare clients don’t make enough to keep up the gig.
Our office does tax returns for over 600 horse & buggy Mennonite and Amish farms..
Hay prices, not so much.
Grain prices are another story. That’s why you grow your own and farm with horses.
He should calculate the depreciation of the vehicle
You drive all those miles for Uber or "Door-Dash" and the vehicle is worn out.
Needs tires, brakes and shocks, seats scuffed and sagging, plus a touch up for scratches and dings.
The per-mile deduction is a “safe harbor” provision in the law. If you can prove the miles driven, the IRS can not question the amount of the deduction.
I don’t know about everyone else, but the record keeping time associated with keeping track of all car expenses is significant. I am not going to go through that exercise for $5 per hour.
Understand.
But a typical car is depreciated for 5 years in normal times.
His Honda has lasted so far. We have “the talk” every year about building a replacement fund for the day when he will need a new vehicle.
And he files it right next to the Retirement Fund talk I give him.
Your best investment is a good CPA. Depreciation + expenses was the way to go for me.
Hay has gone up.
Last year was really bad for hay production, with so much of the west dry and burned up. And many midwest areas suffering flooding.
HEY, I remember him; I called for a LYFT ans HE showed up!
Not to say gas prices are high, but...
You will have to provide a log book of miles driven if you ever get audited.
That is what we had to do for an IRS audit
You need a 'contemporaneous written record' which the IRS has long accepted as a printed copy of an electronic logger. There are many smartphone apps and many auto/truck GPS units that can record this when you specify the destination at the start.
One absolutely VITAL need is to record the vehicle odometer at year start and end. Everything else flows from that total miles!
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