Tax Tip Thursday

It’s that time of year! Winter is coming, and we are going to talk about snow tires.

I am the first person to NOT want to face winter, but I want to give everyone a little bit of insight and advance preparation, and a couple of tax write-offs.

1. If you are putting snow tires on your car (which everyone should!), you need to do it NOW. Or, at a minimum, book your appointment and make sure you pick out your tires. Due to COVID and the usual run on tires in about six weeks, there IS definitely going to be a shortage! This is a fact, so be sure to take action now. There’s your insight.
2. Once you buy the tires, regardless of whether you have a business or not, file the bill in your vehicle maintenance and repairs file folder. All tires have a warranty and the mileage marked on the bill, so if the tires ever fail you will have the bill of sale and may be able to claim warranty on them. That’s your advance preparation!
3. If you do own a business or if you are an employee and drive your vehicle for business purposes, then the bill of sale is your ticket to a tax deduction! That’s your write-off right there.

If you are self employed or you are an employee who uses their vehicle for business purposes, you can deduct pretty much all the expenses associated with your car to the degree that you use it for business. This includes winter tires!

Be sure to keep a mileage log and any other bills for your vehicle. At the end of the year, we calculate what % of your mileage is business and apply that same percentage to all your vehicle expenses. That can be a huge deduction! For example, if you drive your car for business 37% of the time, then 37% of its expenses are deductible! That includes depreciation on the vehicle or the monthly lease amount, too. The mileage log is the key, though, so make sure you keep a good one!

For our bookkeeping clients, we have also found a good way that you can track your vehicle expenses all year round. Ask us today about becoming a bookkeeping client!

Get Those Tires!

These tires could save your life. But they could cause you a tax headache if you don’t track them properly! Book an appointment today to learn how to track vehicle expenses the right way!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.