Spring is upon us, which also means it’s time to file those taxes. As is the usual case, you’re allowed to take deductions for any vehicle that has been used for business, but how much you get depends not only on how much the vehicle was used for business but what method of deduction you choose. The easy way is to simply take the flat rate deduction, which for the 2016 filing year, is 54 cents per mile. But, the easy way isn’t always the best, and it could cost you some significant cash. But, there is a stipulation – if you’re planning to take the standard flat-rate deduction, you must have done so the year you bought the vehicle. Otherwise, you’re limited to deducting actually expenses. However, if you’ve chosen the standard rate the first year the vehicle entered service, you can choose either deduction method in the years ahead.
The other major stipulation surrounding tax deduction for business vehicles is making sure that you keep excellent records, including mileage, and how much of that mileage was used for business and personal use. In short, you can only deduct mileage or actual expenses based on the percentage of time the vehicle is used for business. But, we’ll get to that shortly. Keep reading to learn all about the deduction process, what is acceptable, and what isn’t.
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