The new 2022 car and truck models will be in dealership showrooms soon. If you’re in the market for a vehicle for your self-employed business, don’t forget to factor taxes into the equation.
Starting point: Generally, you can claim deductions for vehicle expenses as a self-employed taxpayer, but there are a few twists and turns along the way. Notably, the tax law includes several “speed limits” that can affect your write-offs.
First off, you may deduct vehicle expenses in one of two ways.
1. Actual expense method: This method allows you to deduct your actual expenses based on the percentage of business use. For example, if you use a car 90% for business and drive it 10% personally, you may write off 90% of your qualified expenses, including gas, oil, insurance, repairs, etc. Furthermore, you ‘re in line for depreciation deductions, subject to certain limits (more on this later).
2. Standard mileage rate: Alternatively, you…