You built your small business from the ground up, and every year one of the most important things to do is ensure that you’re filing your business taxes correctly to get as much back as you can. And if you drive a lot for your business, it’s essential to understand how to file and categorize your auto deduction on your taxes correctly.
That’s where the friendly tax professionals at Maggi Tax come in. We are always up to date on the latest tax code updates and laws for things like corporate auto deductions, so you don’t have to be. And this year, there have been some significant changes to the Tax Cuts and Jobs Act that impact your corporate auto deduction to be aware of.
Why does this matter?
If you’re operating as an S or C corporation and driving a vehicle with a title in your name instead of the business, it’s critical to understand the new rules and regulations around your auto deduction. These changes directly affect you and your 2021 tax filings.
Things have changed. Before, you had to pay close attention to using your personal vehicle for your business needs so that you didn’t lose deductions to the 2% miscellaneous itemized deduction. That’s not the case anymore.
Now, because of the TCJA, you will struggle more between the tax years of 2018-2025 if you want to reap the tax benefits of corporate use of a personal vehicle.
Here Are Some Highlights to Know
- When you use your personal vehicle for corporate business, it’s automatically considered a business vehicle.
- If you want to reap the tax benefits of that business use, your corporation must reimburse you for the use of the vehicle using the IRS standard mileage rate or actual expenses.
- If you trade-in or sell your personal vehicle that you’ve used for business, you have to report a taxable gain or claim a deductible loss with the IRS.
- You have to submit expense reports to obtain reimbursements from your corporation.
You Must Keep a Mileage Log
This is the most critical part of your corporate auto deduction. If you don’t keep a regular mileage log, you can have difficulty knowing how much you’re using your personal vehicle and tracking your deductions. And with a mileage log, if you were to be audited by the IRS, it can save you time and money by being able to show your actuals or mileage expenses.
If you’re using your personal vehicle for your business needs, you must know what deductions you’re eligible for on your taxes. In addition, you want to ensure that your business is reimbursing you correctly, that you have all the paper backups for actual expenses, and that you’re kept track of it all.
This is where the friendly tax pros at Maggi Tax can help simplify your business taxes every year. We have the knowledge, experience, and expertise to help you navigate the corporate auto deduction to know that you’re doing it right. Want to be able to maximize your business deductions and save on your taxes? Call the friendly tax experts at Maggi Tax today at 813-829-1807.