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Here’s how you can use your car’s milage to save on your tax
If you are self employed it is important to realize that you are responsible for paying your taxes.
With the COVID-19 pandemic drastically shifting the working habits of Americans, a larger segment is now self employed, meaning that it would be prudent to keep a track of the ways in which one can drive down the actual amounts you owe to the IRS.
One of the best and often overlooked deductibles is the use of your car for business purposes.
According to New York based tax attorney Julian Block, individuals will first need to figure out to maximize their tax benefits by figuring out what expenses can be written off for personal use and business use.
“If you use your car exclusively in your business, you can deduct car expenses,” confirms IRS agent Sara Eguren
“If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage.”
First of all you must determine if the trips you make on your car are deductible. For example, the expenses involved by driving to and from work might be eligible, however travelling for a meeting or to meet a client is counted as a deductible.
“If you use your car for anything work-related, other than simply commuting from home to work, there are deductions you can take,” Andrew Schrage the co-owner of the MoneyCrashers.com told Intuit Turbotax.
“Although it may not seem like much, it adds up. If you have been temporarily reassigned to another work location that is farther from home, you can deduct the extra distance.”
According to the IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, The per-mile rate for 2021 was 56 cents for each business mile driven. In 2022 the rate is 58.5 cents per mile and increases to 62.5 cents per mile for the last half of 2022 given the recent spike in gas prices and inflation overall.
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