Cisco & Co CPA

  • HOME
  • SERVICES
    • ACCOUNTING
    • PERSONAL FINANCIAL PLANNING
    • BUSINESS FINANCIAL PLANNING
    • CHIROPRACTIC ACCOUNTING
  • WHY US
    • STAFF
  • FINANCIAL RESOURCES
    • DOWNLOADABLE FORMS
  • CONTACT US
CONTACT US

Make the Most of Your Vehicle Expense Deduction

Business person driving a white van
Thursday, 19 August 2021 / Published in Business

Make the Most of Your Vehicle Expense Deduction

Tracking your miles whenever you drive somewhere for your business can get pretty tedious, but remember that properly tracking your vehicle expenses and miles driven can lead to a significant reduction in your taxes.

Here are some tips to make the most of your vehicle expense deduction.

Keep track of both mileage and actual expenses

The IRS generally lets you use one of two different methods to track vehicle expenses – the standard mileage rate method or the actual expense method.

One year the mileage method may result in a higher deduction, while the actual expense method may be higher in a subsequent year. But you won’t know which method results in a higher deduction unless you track both your mileage and actual expenses.

Consider using standard mileage the first year a vehicle is in service

If you use standard mileage the first year your car is placed in service, you can then choose which expense tracking method to use in subsequent years. If you initially use the actual expense method the first year your car is placed in service, you’re locked in to using actual expenses for the duration of using that car in your business.

For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if you choose the standard mileage rate the first year.

Don’t forget about depreciation

Depreciation can significantly increase your deduction if you use the actual expense method.

For heavy SUVs, trucks, and vans with a manufacturer’s gross vehicle weight rating above 6,000 pounds, 100% bonus depreciation is available through the end of the 2022 tax year if the vehicle is used more than 50% for business purposes. Regular depreciation is available for vehicles under 6,000 pounds with annual limits applied.

Don’t slack on recordkeeping

The IRS mandates that you track your vehicle expenses as they happen (this is called contemporaneous recordkeeping). You’re not allowed to wait until right before filing your tax return to compile all the necessary information needed to claim a vehicle deduction.

Whether it’s a physical notebook you stick in your glove compartment or a mobile phone app, pick a method to track your mileage and actual expenses that’s most convenient for you.

Please call if you have any questions about maximizing your business’s vehicle expense deduction.

What you can read next

final notice bill
Tips on Monitoring Your Accounts Receivable
Man handing out cash
New Overtime Rule May Mean More of Your Employees Qualify For Overtime Pay
Hand holding credit card
Keep Your Business Safe With Internal Controls

Recent Posts

  • Person giving an online business review.

    Handling Negative Online Reviews of Your Business

    Here are some ideas on handling those pesky onl...
  • Graduation cap sitting on a pile of money.

    Student Loan Forgiveness Q&A

    While there may be legal and Congressional chal...
  • Person sitting on the floor holding a calculator paying their bills.

    Taming Monthly Bill Creep

    Paying bills is inevitable, but paying too much...
  • A social security card laying on a pile of money.

    Tips to Protect Your Social Security Number

    Very few things in life can create a higher deg...
  • Electric vehicle charging

    New Electric Vehicle and Other Energy Credits

    Tax incentives for purchasing clean (electric) ...

Categories

  • Announcements
  • Business
  • Financial Planning
  • Personal
  • Retirement Plans
  • Tax Tips & Information
  • Uncategorized
  • Wealth Management

Schedule your 1-to-1 financial planning consultation today!

Visit our Office

Get Directions

Speak with a Staff Member

419.629.3494

Contact Us

Send A Message
Cisco & Co CPA

Mark J. Cisco & Co, Ltd.

419.629.3494

419.629.2444

Hours:

  • Monday: 8:30AM - 4:30PM
  • Tuesday: 8:30AM - 4:30PM
  • Wednesday: 8:30AM - 4:30PM
  • Thursday: 8:30AM - 4:30PM
  • Friday: 8:30AM - 4:30PM
  • Saturday: CLOSED
  • Sunday: CLOSED

5030 State Route 66
New Bremen, OH 45869

PO Box 114
New Bremen, OH 45869

  • HOME
  • SERVICES
  • WHY US
  • FINANCIAL RESOURCES
  • CONTACT US

PAYROLL PORTAL

SIGN IN

FOLLOW US!

Copyright © 2021 Mark J. Cisco & Co, Ltd.   |  Website design by Marketing Essentials, LLC   |   Privacy Policy | Site Map

TOP