Can I claim my car as a business tax deduction?

January 21, 2005

Subject:  Tax deductible question
From:  Ellie
Date:  Fri, 10 Dec 2004

Hi,

I'm a new grad and I just started working three months ago. The company is not paying health, vacation or other benefits, but they do file W2 for me. I'm thinking about getting a new car. Can I get a tax deduction if I use the car only for work purposes?

Thanks,
Ellie

Answer

Date:  20 Dec 2004

Hello Ellie,

Very few individuals who are employees qualify as using their cars 100% for business. Commuting to and from work is not business use. Most people use their cars to buy groceries, go for weekend (or evening) activities and for vacations. You must have documentation supporting a deduction for business use of the car.

In addition, employee business expenses are itemized deductions, and are reduced, together with other "miscellaneous itemized deductions" by 2% of adjusted gross income. Most people just starting a job after graduation don't qualify to itemize their deductions.

Good luck!
Mike Gray

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