Tax Implications in Writing off Your Vehicle

Landwehr Financial Solutions is a highly experienced provider of accounting and financial solutions in St. Cloud, MN. By taking a holistic approach, we are able to benefit individuals and small businesses with superior service and individualized education. If you are a business in the St. Cloud, MN area, Landwehr Financial Solutions should be your first call to make sure you are receiving the full advantage of small business tax deductions.

Using Your Vehicle for Business

Being a small business owner, there is likelihood that your personal vehicle will be used for business purposes. Whether you use it to meet with your clients, drop off products, pick up supplies, or travel to conferences, tax law allows certain deductions as a business expense. Although this is good news for many small business owners, the tax code is complex and it can be difficult to navigate the stipulations. Using a professional tax preparation company will allow you to rest easy and know that your tax benefits are fully utilized.

What Deductions Are Allowed?

There are different rules that apply depending on the status of your personal vehicle. If it is a vehicle purchased in the tax year, the IRS has set limits on the amount of the purchase price you may deduct. The limit is also different depending on whether the vehicle is brand new or pre-owned. Also, the limit is governed by the percentage of time the vehicle is used for business purposes. There are exceptions for large SUV’s that weigh over 6000 pounds, and also for vehicles that are considered a 100%  non-personal use vehicle. There is also a tax credit if the vehicle you purchase is an electric vehicle.


Using your personal vehicle that was owned previous to the tax year allows you to deduct costs that result from its business use in one of two ways. The first method is called the standard mileage rate. To determine your deduction, you would multiply the number of business miles driven by the current mileage rate set by the IRS. The rate for 2014 is set at $0.56 per mile. The rate applies regardless of the value of the vehicle driven.


The second method for deducting the business use of your personal vehicle is called the actual expense method. This method allows you to deduct the actual costs accrued due to the business use of the vehicle. Items under this method that are allowed deductions would include things such as the actual cost of gas and other fluids, repairs, and other expenses.


Regardless of the method you choose, you must keep detailed records of your business use to prove the costs are business related. If your records are solid, you may choose to use the deduction method that results in the greater benefit. As with any tax documents, you will need to include the records and store them seven years along with your tax returns. Also important, there are strict guidelines that govern what is considered business use. Adding signage promoting your business on your vehicle does not mean that it is always used for business purposes. Also, commuting expenses are not considered deductible either. It’s important to make sure you can justify your deductions according to the set guidelines.


Landwehr Financial Solutions can ensure that you are represented well in your tax processing. For more information about small business tax deductions, the IRS has provided an article titled “Deducting Business Expenses.”  This article can be helpful to gain a better understanding of acceptable business deductions. Contact us today to learn more about our services and experience first-hand the level of care we give to all our clients in the St. Cloud MN area.

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