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Are you shopping for a new car right now? Do you plan to use your vehicle for your work or business? Don’t leave money on the table – before you fill out an auto loan application, you might want to consider the tax status of your business vehicle. Learn more about how to maximize your refund and minimize your tax burden right here.
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A business can always write off expenses, such as business owned vehicles. If the vehicle is not business owned, then the portion that is used for business use can be written off. The federal government allows for expenses, and you have the option of deducting your actual expenses, or a standard mileage rate. However, if you take the standard mileage rate, then that deduction is the only one you can use. Your monthly payment is not a business expense, meaning the answer to “can I claim my car loan on my taxes?” is a definitive “no” when you’re talking about the monthly payment amount.
If you lease a vehicle things are a bit different. In that case the lease is an expense, since it is not part of the purchase of a vehicle. You can write off a lease payment as an expense if you write off actual vehicle expenses.
After learning that your monthly auto loan payment amount is not tax deductible, you might switch your thinking and wonder: can I write off my car interest? If the vehicle is for personal use, the answer is no. Just like your monthly car payment cannot be written off on taxes, the interest you pay on it cannot be written off, either.
The only exception here would be if your vehicle is a business car or a car that you use for both personal use and business use. In the latter case, you can only deduct the business use percentage of interest paid, as the interest paid on a car for personal use is never tax deductible.
To write off vehicle expenses you must use Schedule C: “Profit or Loss From a Business”. Under the “Expenses” section you’ll find a place to enter car or truck expenses. If the vehicle is business owned, those expenses must be filed under the business’ taxes.
If your business needs a new vehicle, or you need a new vehicle for your job, Green Light Auto Credit’s financial specialists are determined to help you find the financing rate that you need.
Contact Green Light Auto Credit online now or give us a call at (800) 200-5551 to discuss your next auto loan or see if you can write off your vehicle payments as a business expense. We’re happy to answer any questions you might have about your financing options like details about selling an unregistered car.
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