The vehicle expense is one that many people miss out on, which is unfortunate because it is a great tax saving deduction. If you think the deduction isn’t significant enough to really make a difference or feel that it is too much of a hassle to keep track of, you’d be suprized how much it can save you at tax time.
There are two different types of vehicle expense that can be claimed on a tax return:
- Actual—the cost of driving: repairs on the car, fuel, maintenance, etc.
- Mileage—the total miles the car is driven for work.
Each tax return is different, so deciding whether actual expense or mileage would be best depends on your or your company’s situation. Sometimes one is more helpful than the other.
If a vehicle is used for both business driving (say to meet a client) and for personal driving, it may be easiest to simply keep track of the miles the car is driven, rather than taking the actual expense. If actual expense is taken, you would still need to keep track of the miles on top of the expenses so that we could take out the percentage that you drove the car for business.
If the car is owned by a company and used solely for business purposes, actual expense may be a good option. You would need to keep track of the expenses listed above on the vehicle so you can have an accurate amount to deduct on your return.
Contact us at Soulence to see if the taking the vehicle expense is right for you.