Vehicle repairs can be a real downer. It’s one thing to keep up with regular maintenance on your car, but it’s another entirely to have to make major repairs on it. We all know the feeling: you take your car in to the mechanic’s, assuming that there’s something minor which needs to be fixed. Instead, you find out that you’re in need of a repair totaling hundreds or even thousands of dollars. Maybe your car is so beat up that you’re thinking of just selling your junk car instead of trying to repair it.
Is there any way you can cut back on the cost of your car repair bill? That’s when it hits you. Could you deduct it from your annual federal income tax return? If so, that could save you a serious chunk of cash.
We’ve put together this quick guide on car repairs and tax deductions to help you determine whether or not your mechanic bill is eligible for a federal deduction or not. Keep reading for more info.
Do you use your car for a business that you operate? If so, there’s a good chance that the cost of repairing your car could be eligible for a tax deduction.
Here’s the deal. More often than not, business owners opt to deduct their vehicle expenses using what’s called the standard mileage rate deduction. This is accomplished by multiplying the total number of miles your vehicle was driven during the year by 54.5 cents, which is the current standard mileage deduction rate as of 2018. The total number that you come up with is the amount of money that you can deduct from your business income when determining your taxable total.
However, it’s possible to deduct all of the individual expenses for your vehicle instead. This means that rather than using the standard mileage deduction, you total up each of your car’s individual business expenses one by one and deduct the entire amount from your business’s taxable revenue. This can include things like car repairs as well as the cost of fuel, oil, car registration, regular maintenance, tolls, parking costs, and so on.
It can be difficult to decide which approach to tax deduction makes more sense. Generally speaking, the easiest way to make the determination is by totaling up all of your miles driven for the year, multiply them by the standard deduction rate, and come up with a total. Then, add up all of the expenses you incurred over the course of the year as related to your vehicle.
Compare the two numbers. If the cost of vehicle repairs, maintenance, and fees is higher than the number you came up with using the standard mileage rate, then it probably makes sense to deduct your expenses individually. In this case, you can likely deduct the cost of repair for your vehicle.
Do you have an old junk car that doesn’t even make sense to repair? Rather than trying to fix it up and take a tax deduction, why not just sell it and get a new car? Rusty’s Auto Salvage is ready to pay you cash for your junk car today. Visit our website to learn more.
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