Taxes – Part 3 – Maximize Your Business Vehicle Deduction
Most courier services rely heavily on a vehicle to keep their business operating. This is the reason that anyone in this line of work should know exactly how to maximize their business vehicle deductions.
Obviously, the first and most significant deduction to be enjoyed by a courier is the mileage put on their vehicle during the business year. It is at this point that it is necessary to make quite plain that having a single vehicle dedicated strictly to the business is going to make life easier and the deductions simpler to calculate.
When a vehicle is used entirely for business purposes it allows for 100% of the deductions to be taken. Otherwise the professional is going to have to create a flawless log of mileage to be used as documentary evidence in the event their tax returns are audited.
Additionally, if the vehicle is used for both business and personal reasons the owner is going to have to keep track of every single mile and then calculate the percentage used for business and then use that figure to determine the dollar amounts of the deductions instead.
The mileage deduction for the 2009 tax year was $.55 per mile. Because most couriers put on more than 25,000 miles in a given year this means that the average deduction will come in at more than $13,000.
That does not take into account the insurance premiums, repairs, and travel fees such as those charged for tolls and parking.
What other expenses associated with a business vehicle can be deducted?
Some business owners might be able to deduct new car sales tax from their income, some can deduct the interest on the loan for the car, and some might be able to deduct their entire lease payment on the vehicle too.
Most licensing, inspection fees and even some personal property payments to state agencies are considered a deductible expense also.