Purchasing a car is a significant financial investment. From adding the proper insurance coverage to performing regular maintenance, you have to keep track of a lot of things. Many drivers are looking for ways to save money where they can, and you may be surprised to learn about some ways in which you can write off those expenses. Here are a few of them to help you get started.
You may be surprised to learn that switching to an electric or hybrid vehicle has multiple benefits. The IRS provides tax credits to people who purchase plug-in electric motor vehicles. You may qualify for a credit over $7,000. However, you have to pay attention to the deadlines. The electric credit applies to manufacturers. Once a select number of vehicles from the manufacturer have qualified for credit, you may not be eligible anymore.
If you have an older vehicle that is starting to break down, you will be faced with some tough decisions. It may not make much sense financially to invest in repairs for a vehicle that may not last long. If you find that paying for maintenance on the car is no longer worth it, you can donate the vehicle to charity. This could be a smoother process than selling it off as a used car. You won't have to negotiate with buyers who may drive a hard bargain regarding the price. If you donate the vehicle, you can receive a tax deduction based on the vehicle's current market value.
In most cases, the charitable organization will come to pick up the donated car. You can add the tax deduction to your personal or business endeavors. Look at the receipt from the charity, as that will highlight the current value of the vehicle that you donated.
Over the past five years, many drivers have learned about the benefits of practicing an eco-friendly lifestyle. Perhaps you like your vehicle, but you are looking for ways to reduce emissions. Consider the benefits of an electric drive conversion kit. If you are unfamiliar, you can hire a mechanic to install it. Before you make a final decision, consult with your mechanic to ensure that your car is worth converting. If you have an older vehicle, the cost of conversion may not be a worthwhile investment. If you have a new car, converting can help you save money on fuel.
If you work for a company and you have used your personal vehicle for business-related purposes, you are eligible to claim those expenses on your tax deduction. Common car expenses include proper maintenance and fuel costs. The IRS calculates those through a per-mile cost method and the system is updated periodically.
If you are operating a small business, any vehicles used exclusively to conduct business are added to your tax deductions in the form of operating costs. The cost of repairs can be deducted. Keep clear records of your repairs so that you can verify them with the IRS. Be aware that the cost of overhauling a business vehicle does not count as a deduction.
If you are self-employed, you can deduct the cost of professional use, even if it's on a personal vehicle. This is a good idea if you work under a sole proprietorship instead of a corporation. Ensure that you are able to separate personal and professional use of your car. Track your mileage and store all of your receipts.
There are several ways to offset your car expenses. If you are looking to qualify for tax deductions, be sure to keep track of your receipts. For all your car insurance needs, reach out to our team at Fuller Insurance Agency.