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Deducting the Costs of Operating a Vehicle for Business Purposes

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Even small deductions can make a difference during tax season. For example, the IRS allows taxpayers to deduct the costs of operating vehicles for business, charitable, medical, and moving purposes. The rates used to calculate these deductions change every year, so taxpayers should keep these adjustments in mind as the tax season approaches. For help calculating these and other deductions, you should consider contacting an experienced Florida tax attorney who can assist you.

Deductible Expenses  

The expenses associated with operating a vehicle are only tax deductible when the taxpayer is driving for business, medical, moving, or charitable purposes. Further, the amount of the deduction that can be claimed is based on the number of miles spent driving for one or more of these purposes. However, not all business-related purposes qualify for a tax deduction. For example, while the term “business purposes” does include driving from a place of employment to another work site or a meeting with clients, it does not include driving from the home to the workplace, as this is considered commuting, which is a personal expense. Fortunately, those who have a home office and travel to and from their residence to meet with a client or to generally conduct business could still claim a deduction for those miles.

Similarly, what qualifies as a “medical” purpose is also limited, as only miles driven to obtain medical care for a taxpayer or for his or her dependents is deductible. According to the IRS, the travel must also be primarily for and essential to medical care in order to qualify. The cost of driving to relocate is also deductible, but only if the relocation is for work-related reasons and the new place of employment is at least 50 miles farther from the taxpayer’s old home than the distance between the former home and the former job. The taxpayer must also work for the new employer for at least 39 weeks during the year immediately following the move to qualify. Finally, taxpayers can deduct vehicle expenses if they use their own car to provide services to a  charitable organization, which could include driving to volunteer with a church, charity, or hospital.

Deduction Methods  

Taxpayers have two options when it comes to calculating vehicle expense deductions. The first involves calculating the actual costs of using their car, such as parking fees, tolls, registration fees, lease and rental costs, insurance, and gasoline. The second option requires the use of the government’s standard mileage rate, which is multiplied by the number of miles driven. The IRS recently issued the standard mileage rates that will be used to calculate the deductible costs of operating vehicles in 2018. According to the announcement, the standard rates for the use of cars, vans, pickup trucks, and panel trucks will be:

  • 5 cents per mile for business travel;
  • 18 cents per mile for medical or moving purposes; and
  • 14 cents per mile for travel done in service of charitable organizations.

These rates are changed yearly after an assessment of the fixed and variable costs of operating a vehicle.

Call Today for Answers to Your Tax-Related Questions  

To speak with an experienced Florida tax attorney about what deductions you qualify for, please contact Ronald Cutler, P.A. in Florida at 386-490-9949. We offer free one-one-one consultations seven days a week.

Resource:

irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017