Business Deductions
- Amortization
- Business Losses and Net Operating Losses
- Car and Truck Expenses
- Day-Care Services
- Depreciating Business Property
- Depreciating Your Car
- Domestic Production Activities Deduction
- Health Insurance Deduction
- Home Office Deduction
- Meal and Entertainment Expenses
- Organizational Costs and Start-up Costs
- Qualified Plan Awards
- Schedule C Expenses
- Section 197 Intangibles
- Should You Sell or Trade in Your Car?
- Start-up Costs
- Travel Expenses
More Tax Topics
- Business Structures
- Hiring Workers
- Retirement
- Top Tax Myths
- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Need Some Deductions for 2011?
Don't overlook these!
Updated for 2011
Small Business Deductions: Car and Truck Expenses
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What is the Actual Expense Method?
Under the actual expense method you may deduct business-related operating expenses plus depreciation.
Switching methods:
If you start out using the actual expense method for a particular vehicle the first year it's placed in service for business use, you may not switch to the mileage allowance method for that particular vehicle in any other year.
Deductible Car Expenses
- Fuel
- Garage rent
- Insurance
- Interest on your car loan
- Self-employed persons can deduct interest on a car loan. Multiply the annual interest by your business-use percentage to figure the deductible amount.
- The nonbusiness-related portion of the interest is a nondeductible personal expense.
- Employees are out of luck. Car loan interest is not deductible even if the vehicle is used for the job.
- Depreciation for vehicles:
- See IRS Publication 4562 Instructions, page 16 for annual depreciation limits for passenger passenger cars (Table 3) and light trucks, vans, and SUVs weight-rated 6,000 pounds or less Table 4).
- Bonus depreciation for new vehicles placed in service
in 2011 is
$8,000.
- You add the $8,000 to the regular annual depreciation limits for
passenger cars ($3,060 plus $8,000 = $11,060 annual ceiling) and
light trucks, vans, and SUVs 6,000 pounds or less ($3,260 plus
$8,000 = $11,260 annual depreciation ceiling).
- NOTE: SUVs and trucks weight-rated over 6,000 pounds are not subject to annual depreciation ceilings.
- You add the $8,000 to the regular annual depreciation limits for
passenger cars ($3,060 plus $8,000 = $11,060 annual ceiling) and
light trucks, vans, and SUVs 6,000 pounds or less ($3,260 plus
$8,000 = $11,260 annual depreciation ceiling).
- Also see Depreciating Your Vehicle- Six Things to Know about Depreciating Your Vehicle
- Lease payments::
- If in 2011 you lease a vehicle for a lease term of 30 days or more, you may have to include an inclusion amount in your income for each tax year you lease the vehicle. To do this, you do not include an amount to income. Instead, you reduce your deduction for your lease payment. deduction. See IRS Publication 463 page 24 (the 2010 edition of Publication 463 was the latest edition available as of January 8, 2012).
- This income adjustment does not apply if you use the IRS mileage allowance method.
- Oil
- Parking fees
- Registration fees
- Personal property tax for vehicles:
- Some states charge a registration fee based on the value of the vehicle rather than its weight, model, year, or horsepower.
- The part of the fee related to the value of the vehicle is a personal property tax.
- If you use your vehicle less than 100% for business, deduct the business portion of the entire registration fee as a business expense. Deduct the non-business portion of the personal property tax on Schedule A if you itemize your deductions (the personal property tax line).
- States that assess a personal property tax on vehicles: AL, AZ, AR, CA, CO, GA, IN, IO, KY, LA, MI, MN, MS, MO, MT, NE, NV, NH, SC, WA, WY
- Check with your state
- Personal property tax for vehicles:
- Repairs and maintenance
- Tires
- Tolls
Next:
Car Expenses: 100% Business Use of Vehicle
Related Links
- Turning Commuting Mileage into Deductible Business Expense
- Phaseout of Hybrid Credit
- Alternative Minimum Tax (AMT)
- Audit Proofing Your Car Deduction
- Tracking Business Miles
- Estimates of Car and Truck Expenses
- Mileage Sampling
- Electric Cars
- Annual Depreciation Limits for Electric Cars
- Should You Sell or Trade in Your Vehicle?
- Nontaxable Exchange (trade-in old vehicle)
- Taxable Sale of Car
- Computing Basis of New Vehicle When Trading In Old Vehicle
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