NOTE: Welcome to the 2nd article in our series, The Expert Speaks. You can find the discussion on faster payment here but first, check out whether you can deduct all those car expenses from your taxes with today’s financial expert, Wendy Barlin CPA – Ciao, Dina
Inquiring lawyer minds want to know: Can you deduct your car expenses on your taxes?
Well the answer as always it……………it depends. Don’t you love that ?!?!
Those two small words are the reason I always recommend you ask a professional tax preparer regarding your particular situation and not randomly allow Google to answer for you. How ironic because you say those works all the time, right?
THE IRS says that under certain circumstances a taxpayer can claim a deduction for using their vehicle for business purposes. If you use your car for business purposes, you ordinarily can deduct car expenses using either the standard mileage rate or actual expenses.
The cost of commuting from home to your main job is a nondeductible personal expense on your taxes. This is true regardless of the distance traveled to get to work. You cannot convert a nondeductible commute into a business expense by doing work during the commute. Sorry, Counsel.
Use of a vehicle qualifies as business use under all of the following circumstances:
• Getting from one workplace to another in the course of a taxpayer’s business or profession when the taxpayer is traveling within the city or general area that is
the taxpayer’s tax home
• Going to a business meeting away from the taxpayer’s
• Getting from home to a temporary workplace when
the taxpayer has one or more regular places of work
Great news if you are a trust and estates lawyer or a probate lawyer who travels to your clients to do work.
To use the standard mileage rate for your taxes, it must be used in the first year the car is available for business. In later years, you can choose between either the standard mileage rate method or actual expenses. If you use the standard mileage rate, you cannot deduct actual car expenses for that year.
A taxpayer can figure a business auto expense deduction by comparing the standard mileage rate with actual expenses and choosing the larger amount in the first year the vehicle is used for business. If the actual expense method is chosen in the first year, it must be used in all subsequent years until the vehicle is no longer used for business.
Actual car expenses include the cost of depreciation, lease payments, registration fees, licenses, gas, oil, insurance, repairs, tires, garage rent, tolls, and parking fees. Sales tax paid on the purchase of a car is added to the basis of the car and deducted through depreciation.
And by the way, fines for traffic violations are never deductible, even if incurred while driving for business! (Try those parking tickets)
And so as you can see, it depends.
You can reach Wendy and learn more about how she helps lawyers keep more of what they earn at Wendy Barlin CPA
www.wbarlincpa.com Wendy is a Profit First professional.