The tax season is just around the corner, and so if you are a car owner, it’s natural to feel anxious about meeting such financial obligations. For some drivers, tax seasons often bring them a massive sigh of relief as there is the possibility that they may receive a tax refund.
The good news is that you may be able to lower your tax bill or improve your refund by taking advantage of the right tax write-off.
Can You Deduct Car Repairs from Taxes?
The short answer is yes. In some circumstances, car repairs are deductible from federal tax returns. Nevertheless, it’s not all taxpayers who can leverage this tax write-off. It’s better to consult tax professionals for expert advice on whether vehicle repair and maintenance write-offs apply to you.
The Internal Revenue Service (IRS) says that if you are a business owner or self-employed entrepreneur, such as a ride-share driver, you may qualify to deduct the costs of your car repairs on your federal tax returns.
Unfortunately, the IRS does not permit most employees who use their vehicles for work to take business expenses deductions. Furthermore, an employee may not claim car-related deductions if their employer fails to reimburse costs that emanate from their use of the car for work.
With that being said, some class of employees may be allowed to deduct unreimbursed travel expenses. Examples of this special group of employees may include military reservists, local government officials, and some entertainers and state officials.
Which Car Repairs Qualify To Receive Tax Deductions
According to TurboTax, the following types of car repairs and maintenance procedures are eligible for tax deductions.
- Oil change
- Tire replacement
- Air filter change
- New windshield wiper installation
- Repairs including changing headlights or fixing faulty brakes
How To Deduct Car Repairs On Your Tax Returns
According to tax preparation firm H&R Block, you can deduct your car body repairs and other vehicle expenses by following these two techniques.
Actual Vehicle Expenses
This refers to the exact amount you spent to repair your car plus extra costs relating to driving and business purposes.
Standard Mileage Rate
During the 2019 tax year, the IRS-approved mileage rate was at 58 cents/mile. Going by the standard mileage rate, you cannot deduct auto repairs separately. A portion of this rate already accounts for your vehicle repairs.
Those who use their cars for both business and personal driving are required to divide their expenses according to the number of miles they drove for each purpose. This means if you use your vehicle for, say, 50% of the time for business purposes, you can only deduct 50% of the repair costs, while the other half relating to your personal use is not deductible.
To ensure that your vehicle repairs are deductible, you have to pay great attention to record-keeping. Track your car’s mileage while accounting for every business or personal trip. You can use apps like Everlance, TripLog, and MileWiz to help record your mileage.