The Internal Revenue Service (IRS) eases the burden that taxation places upon individuals and businesses by allowing them to deduct a variety of expenses against their income. While the business use of a vehicle is considered a tax-deductible business expense, any legal penalties that may arise due to vehicle ownership, such as the cost of traffic tickets, are not tax-deductible.
Fines and Penalties
The IRS does not allow taxpayers to deduct the cost of fines and penalties imposed by a government body for breaking a law. While parking tickets and other driving-related penalties are typically considered minor offenses, they are still legal penalties imposed for violating laws. According to the IRS, examples of fines and penalties that are not deductible include parking tickets, tax penalties and fines paid to settle actual or potential liability in civil or criminal cases.
Parking Fees and Tolls
Operating a vehicle for business purposes may cause you to incur parking fees or road tolls. The IRS says that the cost of parking fees and tolls are tax-deductible when incurred while operating a vehicle for business purposes. For example, if you park a business vehicle at a client's business and have to pay a fee, you can deduct its cost. You cannot, however, deduct the cost of fees paid to park a car at your own place of business.
Cost of Operation
Businesses may deduct the cost of owning and operating a vehicle for business purposes, such as the cost of leasing a car, gasoline, oil and maintenance. The amount that taxpayers may deduct can be equal to the actual expenses incurred while operating the car for business purposes. Alternatively, the taxpayer can deduct an amount figured by multiplying the mileage driven for businesses purposes by a standard mileage rate. The IRS allowed a standard rate of 50 cents per mile for the 2010 tax year.
The tax deduction for fees and tolls paid is a separate deduction from the deduction based on the standard mileage rate or actual car expenses. It is important to keep accurate records of car expenses, parking fees and tolls paid so that you can take deductions and save as much on taxes as possible.
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.