The Patrick Parker Realty Tax Season Blog Series:
Tax Deductions for Using Your Vehicle
Buried in the tax code are some opportunities for savings that you might not be aware of. Here’s a look at the deductions you might be able to take depending on how you use your vehicle.
If you use your vehicle for business – to visit clients on a regular basis, not to commute to an office – you have the opportunity to deduct the cost of operating the vehicle during the year. You have the choice of using your actual cost, keeping every last receipt for gas, maintenance, etc., or using the standard mileage rate.
The cost of gasoline fell toward the end of 2013, so the standard mileage deduction is dropping from 56.5 cents per mile in 2013 to 56 cents per mile in 2014. Whichever method you choose, you are required to keep notes documenting the business nature of the miles you are using. You can choose either method each year, but if you choose the standard mileage rate for a vehicle you are leasing, you must stay with this method for the full term of the lease.
The cost of transportation to doctor visits or to receive required medical treatment at a hospital is also a deduction. This includes not only the cost for your own vehicle, but also for a taxi, bus, train, plane or ambulance. Keep track of tolls and parking, as these are also a deduction. If you are using your own vehicle, keep a close eye on the dates of the visits and miles driven. The per-mile rate is 24 cents in 2013, dropping to 23.5 cents in 2014.
The ability to deduct moving expenses starts with a few rules: the move must be related to work in terms of both time and distance; the new job location must be at least 50 miles farther away from your old residence than your old job was; and the house move must occur within a year of the job move. Just like the medical miles, the per-mile rate is 24 cents in 2013, dropping to 23.5 cents in 2014.
As valuable as your time may be, there’s no deduction for it on your taxes. However, you may deduct actual vehicle expenses such as gas and oil directly related to getting to and from the event or 14 cents per mile driven for charitable work. This is the one transportation cost that’s not adjusted by the IRS each year, but is changed from time to time directly by Congress. This deduction is only available if you itemize, as it’s taken on Schedule A in the same section as your other charitable deductions.
Each year, the IRS issues a notice, typically in early December, with the rates in effect for the next year. The 2014 Standard Mileage Rates were published on December 6, making these new rates official.
If the way you use your vehicle fits with any of these categories, hopefully these tips will make for a smooth ride when filing your taxes.
Keep in mind that this is general information designed to help you put these valuable deductions on your radar. Patrick Parker Realty Agents and Realtors are not certified accountants. Please be sure to check with your tax adviser to see if you qualify for a particular credit or deduction.
The Blog Series will cover many topics such as How do I qualify for a home seller break?, How do I qualify for a home buyer break?, Do I have to report the home sale on my return?, What is the gain on the sale of my home?, What Are Home Renovation Tax Credits?, Deducting Mortgage Interest, Taking the First-Time Homebuyer Credit, How to Avoid Taxes on Canceled Mortgage Debt, Tax Incentives as they relate to Life’s biggest transitions, such as Marriage, the Birth of a Baby, Divorce, or the death of a Spouse and much more. New posts in this Blog Series will be published twice weekly.
For more information about paying taxes on the sale or purchase of your home or any other questions you have about this article please speak with your tax professional or visit www.irs.gov.