The hassle and expense of car repairs can pose an especially tough burden to anyone who needs a vehicle for business purposes. For tax purposes, however, you can deduct certain vehicle costs if you drive or travel for work. Conditions and exceptions apply, and you have a choice of deducting actual expenses or a standard mileage rate. First, keep an account of business and personal use of the car.
Business and Personal Use
You can deduct car repairs under two different circumstances: You use a vehicle for your own business, or you're an employee and the boss doesn't reimburse your repair costs for your own car or a company vehicle. For your own vehicle, you have to account for business and personal use of the car, and the percentage you allocate to business use is also the percentage of repair costs you can deduct.
Keep records of all vehicle costs if you plan to take a deduction. You can also write off gas, oil, tolls, parking, insurance, lease costs and various other costs, while applying the percentage of business use to the total. You can't allocate total repair cost, or any other expense, solely to business use. If you're in an accident that is not your fault and your repairs are not covered by the other guy's insurance, the difference can be deducted as a casualty loss. For this deduction, file Form 4684, Section B for business-use property.
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Standard Mileage Deduction
The standard mileage deduction is a useful alternative to all this recordkeeping and calculating. Apply a fixed mileage rate to the amount of business miles you've driven, with the exception of daily commuting, which is not deductible. For tax year 2014, that rate reached 56 cents a mile. If you use the standard mileage, you can't itemize or claim individual expenses.
If you're self-employed, the Internal Revenue Services wants to see a Schedule C for any expenses you're deducting. Car and truck expenses, whether you're using standard mileage or actual expenses, go on Part II, Line 9. If you're an employee and bearing all or a part of the vehicle cost, you use Form 2106, Employee Business Expenses. Part II of Form 2106 is the place for either claiming the standard mileage or itemizing; repair expenses go on Line 23. You claim the business use percentage on Line 14 of this form.
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