If you bought a car in the last year, you may be able to list your new car on your taxes. There are two main circumstances when you should deduct the cost of your new vehicle on your taxes.
– If you use your vehicle for business partially or full-time
– If you plan to itemize deductions rather than taking the standard deduction suggested by the IRS.
In most cases, it doesn’t make sense to list your new car as a tax deduction. In those cases, it can just create more of a hassle than anything else. It makes the most sense to deduct the cost of your new car if you are listing more than one item on your tax forms.
If you use your new car for business only, then you can deduct its entire cost. Let’s say you use the vehicle for business and personal use. In this case, you would only deduct the cost for when it is used for business. You will especially list your car for business use if you aren’t reimbursed by your company for gas and other utilities. The largest tax deductions for cars are reserved for people who own their own business and purchased a vehicle for that business.
How do you decide whether or not to deduct the cost of your new car on your taxes? Our best advice would be to consult an accountant or whoever does your taxes. If you do your taxes, then you can still seek the advice of an expert. In the meantime, make sure you are saving all paperwork that you receive from your car dealer where the car was purchased, as well as any registration paperwork received from the DMV.
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