Car Write-Offs for Your Personal Vehicle

While car write-offs are geared more towards businesses, there can be a few exceptions. Many people think that there are no circumstances where a car can be written off for personal use and therefore do not take the time to look further into it. There are, however, exceptions for the energy conscious as well as those who are self-employed.

Personal Write-Offs

While you cannot simply write-off the cost for your gas or parking to get to work, there is one great write-off that may appeal to you. Beginning several years ago, the government began giving credits for those who purchased energy efficient vehicles. If you have purchased a hybrid car after 2005, you can write off a certain amount of the cost when filing your taxes. The amount of your write-off will vary though depending on when you bought the car as well as the cost, make and model and the state that you reside in. While the deduction that you can take has been lowered since 2005, you can still claim up to $3,500 depending on your make and model. To get a write-off, the car must have been purchased before December 31, 2010, the credit must be claimed by the original owner and it must be used predominately in the United States. Note that this write-off is fading out over the years and may not be available for the next tax filing season.

Self-Employed Write-Offs

Those who are self-employed are able to write off additional car expenses. There are 2 different methods to take when calculating mileage. The standard rate method is much easier to keep track of as you only need to log the miles driven for business. Then, for 2010, you can claim $0.50 per mile that you drove. The advantage to this method is that you do not have to worry about detailing your records or putting in that extra effort. The downside however is that you may get less back and you will have to claim parking expenses and tolls separately. The actual cost method is much more detailed. You can deduct much more including car washes, lease payments, tolls, actual mileage, gas, repairs, tires, maintenance and depreciation to name a few things.

You do have to keep extremely meticulous logs and records. It can be helpful to keep a log inside of the car with a binder for each receipt. While this method can be much more tedious, you will be able to claim much more, maximizing your return. Schedule C or Form 1040 F are used when claiming the car write-off. There are details on each form that can help to guide you through the process. These can be found at a local library, village hall, post office, school or IRS office. Note that different filing methods need to be taken if you are a regular employee with a business car.