08 Nov Need More Deductions? Take a Last-Minute Vehicle Tax Deduction
With 2019 rapidly coming to a close, it’ll be tax season soon enough. You know what that means?
Now is the time to maximize your deductions to have a smaller tax bill!
There are many things you can do at the end of the year to reduce your tax bill, but one of the most effective is to take a last-minute vehicle tax deduction.
What’s the Benefit of a Last-Minute Vehicle Tax Deduction?
If you’ve followed our blog, then you’ll recall that we’ve discussed how a vehicle purchase can save you some tax dollars based on the value of the car and the percentage used for business. If you haven’t read that article, the formula looks like this:
car value x % driven for business = total tax deduction.
If you purchase a car for $20,000 and use it 50% of the time for your business, then you can take a deduction of $10,000. Nice and simple (you can thank the Tax Cuts and Jobs Act for that). It also doesn’t have to be a brand new car. You can purchase a used car and get a deduction based on what you paid as well.
However, we’re more focused on the timing. It’s possible that you haven’t had much expenses and are in danger of paying a hefty tax bill. Because there are still several weeks left in the year, you can take seize the moment and get yourself a new car. If you’ve been considering an upgrade, better to do it before the end of the year.
Things to Remember
Of course, with claiming a big deduction, there are a few things to remember. One is that simply purchasing the new vehicle isn’t enough to get the deduction. You have to drive the car for at least one business mile by December 31. If it’s hasn’t been driven for business at all, you can kiss that deduction goodbye (or, at least, until 2020).
On top of that, the vehicle deduction can only be taken once. You cannot continuously deduct the cost of the vehicle year after year, even if you’re using it for business. That’s why mileage deductions exist.
Have any further questions about vehicle tax deduction? Call us at 614-524-4888 or message us on Facebook!