IIf you are self-employed, it is important to realize that you are responsible for paying your taxes.
With the COVID-19[feminine] pandemic is drastically changing Americans’ work habits, a larger segment is now self-employed, which means it would be prudent to keep track of ways in which one can reduce the actual amounts you owe to the IRS.
One of the best and often overlooked deductibles is using your car for business purposes.
Car owners take note
According to New York tax attorney Julian Block, individuals will first need to determine how to maximize their tax benefits by determining what expenses can be written off for personal and business use.
“If you use your car exclusively for business, you can deduct car expenses,” confirms IRS agent Sara Eguren.
“If you use your car for business and personal purposes, you should split your expenses by actual mileage.”
What if you use your car for both personal and professional reasons?
First, you need to determine if the trips you take with your car are deductible. For example, expenses related to driving to and from work may be eligible, but travel to a meeting or to meet with a client is counted as a deductible.
“If you use your car for any work-related work, other than just commuting, you may qualify for deductions,” Andrew Schrage, co-owner of MoneyCrashers.com, told Intuit Turbotax.
“While that may not seem like much, it adds up. If you’ve been temporarily reassigned to another workplace further away from home, you can deduct the extra distance.”
How much are you saving?
According to IRS publication 463, Travel, Entertainment, Gift, and Car Expenses, the rate per mile for 2021 was 56 cents for each mile flown. In 2022, the rate is 58.5 cents per mile and increases to 62.5 cents per mile for the last half of 2022 given the recent spike in gasoline prices and overall inflation.