Typically, deducting the interest you pay each year on a vehicle loan is not an option, but there is an exception for those who use their vehicles for business purposes. While there are some rules about how much you can deduct, this is a great way to reduce some of your tax debt.
Actual Vehicle Expenses
If you do use the vehicle you have a loan on for business purposes, then you may be able to deduct some of your actual vehicle expenses. These expenses may include:
- Automobile loan interest
- Insurance costs
- Vehicle maintenance
- Tolls and parking fees
Keep in mind that if you do claim any of these expenses, including vehicle loan interest, you will need to keep good records in case there is ever any question from the IRS.
What You Can Deduct
Determining the amount of vehicle loan interest you can deduct from your taxes will depend on how much you use your vehicle for business purposes. If you use it solely for business purposes, then you will be able to deduct the entire amount of interest paid for the year. If you use it part of the time, you will need to calculate the percent of the time you use it to determine the amount you can deduct.
To learn more about deducting vehicle interest on your taxes, contact Taxation Solutions, Inc. today!