Learning how to deduct rental car expenses on taxes may significantly lighten your tax burden. You heard it right! You can, in fact, deduct rental car expenses on taxes if you are filing for an itemized deduction. This can be a great way to lower your tax payments or increase your tax refund. This article will guide you through the process.
- Make sure you are eligible for the deduction. Deduction on rental car expenses on taxes is not for everyone. You are qualified for such deduction if you use it for one of the following purposes: business, medical, moving/relocating and charity.
- Deduct rental car expenses on taxes for business. This is perhaps the most common type of tax deduction. You need to file the tax as a business owner or for self-employment, and file for itemized deduction.
- You can deduct more than you think. There are a number of expenses you can deduct on taxes, such as rental or leasing costs, gasoline and repair. The only things that cannot be deducted are fines and tickets, such as parking and speeding tickets.
- Use the standard mileage rate instead. Standard mileage rate is the amount of car expense you can deduct on taxes per mile. You can find out the rate that is applicable to your category easily online by using one of the main search engines.
- Car expenses verses standard mileage rate. The answer always come down to which is better. To be honest, that depends on your situation. You can simply compare the amount of which you can deduct by using each method, and find it out yourself.