Business Vehicle Deductions

What portion of your vehicle is used for business purposes?

As we've said before, one of the most common questions we get is about how to deduct the business use of your vehicle. This type of deduction is fully allowed, and as CPAs we encourage you to deduct the business portion of your vehicle expenses. 

The easy thing to do is to say your vehicle is used 100% for business purposes, and then deduct every auto-related expense in your business. Unfortunately, the easy thing is NOT the right thing, and that kind of attitude raises red flags for tax audits. It is extremely uncommon for a vehicle to be used 100% for business purposes, and the government knows that. In reality, even any high percentage of business use is pretty rare.

The best way to determine the business portion of your vehicle expenses is to track mileage. We've written before about deducting business mileage, and a great phone app to help you do so effectively. Whether you use an app or a piece of paper, when you track your business miles your log is evidence to support your business vehicle deduction.​