How Do You Write Off Business Use of Your Personal Vehicle?

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I frequently get questions at USTaxAid about how to write off a business car or the business use of a personal vehicle. In a minute, I’ll post the actual question, but let me talk about a few of the main details first.  

You can write off a vehicle based on the percentage of business use you have or based on mileage. You can’t take both. So, if you’re taking the mileage method, currently 56 cents per mile, that’s all you get. You can’t also take loan interest, depreciation, repairs, gas or other car related expenses. It’s just 56 cents per mile. 
If you are taking the percentage method, you get the business method times the total expenses. So if you business car is 60% of your total expenses, it would be 60% of your car loan interest, 60% of depreciation, 60% of bonus depreciation, 60% of gas, oil, tires, repairs and more. 
One or the other. Not both.
What if it’s a personal vehicle? The same thing applies. One or the other. If you have a business entity, include the use of your personal vehicle or that you bought a vehicle using your personal credit and assumed it through the business in your regular meetings, as documented by your minutes.  

There are a few other rules.  

To use the standard mileage rate, you must own or lease the car and: 

  • You must not operate five or more cars at the same time, as in a fleet operation, 
  • You must not have claimed a depreciation deduction for the car using any method other than straight-line, 
  • You must not have claimed a Section 179 deduction on the car, 
  • You must not have claimed the special depreciation allowance on the car, and 
  • You must not have claimed actual expenses after 1997 for a car you lease. 

What Date Do You Use to Put In Service? 

This is the question that I received at 

I have a question about the date my vehicle was placed in service for business purposes. Does this refer to my current car? Or to the first time I ever put a car in service for business purpose (including one that I no longer own)? 

Answer: The question refers to the vehicle you’re currently claiming business use for. It doesn’t matter whether it is the mileage method of the business percentage that is used. What date did you place that vehicle into business service?  

What Tax Questions Do You Have? 

Got a tax question? Here’s how to get them answered. Tax Answers!

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