The question of Mileage or Actual can get complicated quickly with lots of variables. Seven ‘Rules of Thumb’ to Consider When Writing Off Auto Expenses This includes a mileage log…yet the write-offs can be significant (more below). However, it requires the business owner to keep excellent records. The Actual Method allows the business owner to take all of the expenses listed above plus depreciation. For example fuel, repairs, maintenance, auto payments, etc., …except interest on the auto loan (more below). It includes everything you might pay for with your car. The Mileage method is a fixed deduction amount (in cents) that you can take for every business mile you drive your vehicle for business. Thus, it’s important to understand the TWO MAIN OPTIONS business owners must choose from to document and utilize when writing off the auto expenses. “Which strategy is best for me with my car, truck, or SUV…even my RV? Should I use the mileage or actual method and should I lease or buy new or used?” The big question in conversations with our clients is: The Actual Versus Mileage MethodĪlthough, as with most tax deductions, you don’t maximize the auto write-off by simply checking a box. Keep in mind that the Auto deduction can include: automobiles, SUVs, Trucks, Motorcycles, RVs, Vans, Delivery vehicles…really anything that doesn’t fly or isn’t on rails. See my other article on travel expenses: “Plan Your Travel for a Big Tax Write-Off.” The travel expense includes things such as airfare, hotel, taxi, tolls, parking, uber, Airbnb, and rental cars. This is all about expenses for any of YOUR vehicles with some level of business use. When it comes to the auto write-off, first and foremost remember the auto deduction isn’t part of the travel expense. It’s 100% in 2022 and starts to phase down to 80% in 2023 (more on this and how it works below). This startegy includes Trucks, SUVs, RVs, and even Motorcycles. The biggest benefit of the current auto deduction is the strategy of Bonus Depreciation. Business owners able to write off a vehicle faster and with even bigger deductions! The Auto Deduction is the best it’s been in over 30 years.
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