A Used Car Can be a Good Tax Benefit

When it comes to used cars for sale in Temple Hills, MD most small businesses won’t automatically think about how used cars can equal tax benefits, but they can. If a business is finding itself in the position of needing a replacement vehicle or an add-on to its existing fleet, a used car can easily pay back some of its cost in only a few years. This is because, if the car is used entirely for the business, both the usage and cost of maintaining the vehicle can be deducted as business expenses in a tax return filing. This is particularly advantageous for small businesses, especially those that file tax returns on a Schedule C.

Vehicle costs can include, first off, the purchase of the vehicle (as well as its sales tax charge) which is then depreciated over about five to ten years, reducing business taxes accordingly in partial amounts by year. Then the business can also deduct usage and repair one of two ways: direct actual costs or using the IRS standard rate mileage deduction value (can’t use both). Between the two methods, the IRS standard mileage approach is far easier to apply. A business just needs to keep a good mileage log written down. Both expense categories of purchase and usage can then be posted as direct expense reductions to gross profit of the business, reducing income taxes. That in turn can pay for the car and keep producing savings for the business.Just remember to keep all receipts and be religious about documenting usage.

For more information on used cars for sale in Temple Hills, MD and how a car purchase can help your business, contact Car Smart today at (888)292-8115.