Do you use your car for business? Not commuting to work, but to actually perform business functions, such as deliveries or service calls? Then you’re probably already aware that you can deduct your typical vehicle expenses when you do your taxes. You may be wondering if there’s a car repair credit or deduction as well, however.
How Can You Deduct Car Repairs?
Even if you only use your vehicle for business part-time, you may still be able to find some savings during tax season. In order to figure out whether your vehicle is eligible for tax credit, you should ask yourself the following three questions:
- Would my car be considered a business vehicle?
- Which deduction method will I be using?
- What are deductible repairs?
When we ask whether or not a car is a business vehicle, we’re only considering cars, trucks, and SUVs that are used for business. Equipment vehicles like fork lifts or “cars for hire” like taxis are not eligible. It’s also important to note that you can’t subsidize a “luxury” car used for business. Make a note of who, or what, officially owns the vehicle – employee, business, or business owner?
Next, you should understand the difference in deduction methods. Many people who use cars for business use the “standard mileage rate” for deductions (53.5 cents per mile in 2017), which is considered to include general wear and tear on the vehicle, including repairs. If you want to deduct repairs specifically, then you need to keep records of all individual expenses incurred for the vehicle while it was in business use, usually as an itemized list.
Which brings us to the next important factor: if you use your car for business, then keep good records! You can’t just guess when tax season comes around. You need the actual miles and/or expenses. You can actually buy a “vehicle expense log” that’s made exactly for this purpose. Keep it in your glove compartment and get into the habit of recording everything! This will also help you determine whether you’ll get a better deduction by using the standard mileage rate or filing individual expenses.
If you choose the standard mileage rate, then the only other deductions you can make are on registration fees and taxes, loan interest, and tolls or parking fees. When you keep an itemized list of actual vehicle expenses, however, you can also include gas and oil, licenses, tires, depreciation, insurance, maintenance and repairs, and a few other odds and ends.
Record everything if you’d like to deduct your car repairs during the next tax season. If you use your car for business, your repairs should be deductible as long as you file your actual car expenses. You can’t deduct repairs if you use standard mileage rate, so keep that in mind. If you have other questions, feel free to ask us here in the shop – we’re very familiar with the process!