Bring Your Car to Work: Reduce Your Tax Burden
When Driving on the Job
by Steve Dearborn
You've just been offered a fabulous job opportunity, but here's the catch--you need to use your own car for the post. Whether you are worried about the wear and tear this will put on your vehicle or the fact that your old jalopy won't impress anyone ever, there are ways to deal with this situation. Optimize your work-car relationship with the following tips:
The Right Wheels
Your ride has a big impact on your image, your reliability, and your ability to do your job successfully. If you know that your current car isn't up for the challenge, consider getting a new one. However, unless you are locked into a rock-solid employment contract, you may want to consider this option for the first few months, to be certain you are going to stick with the new position.
Instead of saddling yourself with a car loan, consider leasing a vehicle instead. When you get a cancel anytime lease, you have the right wheels when you need them, but you don't have to worry about being stuck with an expensive car payment if this job doesn't work out.
Claim Every Cent
According to TurboTax, if you use your car for work, you can claim your vehicle's expenses as a deduction on your taxes. However, if your boss already reimburses you for your driving expenses, you are not allowed to take this deduction. To qualify, you must use your car for more than just driving to and from work and home. If you drive to sales meetings, client's offices, or anywhere else besides the main office, you can claim 56.5 cents for every mile driven, according to IRS Publication 463.
That figure covers not just the gas but also the wear and tear on your vehicle. However, you don't have to write off miles. If you prefer, you can write off your vehicle-related expenses instead. If your vehicle is used exclusively for work, you can write off all of these expenses, but if you use the car for both work and personal use, you can only write off the percentage that you use for work.
To determine which percentage you should use, track all of the miles that you drive for work as well as the total miles driven throughout the year. At the end of the year, divide the number of work miles by the number of total miles, and you will have the percentage that you need. For instance, if you drove a total of 10,000 miles last year and you drove 6,000 miles for work, you can claim 60 percent of your driving expenses on your taxes. That means that you can write off 60 percent of your maintenance work, registration fees, car washes, and insurance costs.
From the high cost of fuel to the cost of new tires, it isn't free to drive your car, so make sure that you track every single mile. That will ensure that you get the financial break that you deserve at tax time. Use an app like Trip Log to help you with your records. Using GPS, this app records your mileage and gives you a place to upload and store your receipts for fuel and expenses. When tax time rolls around, you'll love the easy write-off.
About the Author:
Steve Dearborn loves writing about cars and in his spare time is a master vegetable gardener.