2012 Tax Deductions for Car - How much tax deductions from a car?
2012 Tax Deductions for new car and the rest auto expenses depends upon the purpose you are driving for. Thiese purposes can be categorized as follows:
For business purposes,
moving and relocating
Hospital and Health purposes & expenses
In these reasons mentioned above, you'll be able to claim tax deduction against cost of your vehicle. The amount of your deduction is based on the number of miles that you spend on driving for the tax-deductible purpose. The way it goes is you can follow the option of using a standard mileage rate.
Let us look at these deductions more closely -
Business Purpose Tax Deduction for Car
Here's how using the vehicle for business purpose works. The 2012 tax deductible purpose has to be about driving from your place of employment to another work site, to meet with a client, or going to a business meeting. Commuting from your home to the office doesn't count as a business purpose. But there is a priviledge, if you have an office in your home, then traveling from your home office to meet with a client or conduct business is tax-deductible.
The deduction for business use of a vehicle is taken on Schedule C if you're self-employed, Schedule F if you're a farmer, or as an itemized deduction as part of your unreimbursed business expenses (Form 2106) if you're an employee.
You can also deduct car expenses if you used your car in providing services to a charitable organization. Also, driving to perform volunteer services for a church, charity or hospital can be claimed as deductible. This deduction is taken on your Schedule A as part of your charitable donations.
Moving and Relocating
Here's how moving & relocating costs are analysed for tax return deductions. The cost of driving your car while moving to a new residence may be deductible as part of the moving expense deduction. In order to qualify in 2012, you need to relocate at least 50 miles farther from your old home than the distance between your old home and your old job. This deduction is taken on Form 3903.
Car use for Medical Purpose in 2012 tax deductions
The way medical purpose deduction is used as a tax benefit is if its obtaining for the purpose of medical care for yourself or your dependents. The expense must be primarily for, and essential to, medical care. The deduction is taken on your Schedule A as part of your medical expenses.
Deductions based on actual expenses
Here are some things that can be deducted based on actual expenses:
Parking fees and tolls paid
Vehicle registration fees
Personal property tax
Interest on a loan (for self-employed people only)
Repairs, including oil changes, tires, and other routine maintenance
2012 Lease and rental expense
Fuel and gasoline
But remember, fines and tickets, including parking tickets, are not deductible. And expenses related to personal use or commuting are not deductible.
Rates of Standard Mileage
This is the method which is used as a substitute of calculating actual expenses in total. The standard mileage rates during a previous year are as follows:
About 50 cents per mile for business,
about 20 cents per mile for medical or moving purposes, and
14 cents per mile for charitable service.
Like previous years, in 2012 tax returns also Taxpayers can also deduct parking fees and tolls in addition to the standard rate based on miles driven.
Now here comes the battle that what is Better: Actual Expenses or the Standard Mileage Rate?
The good thing about this is that the taxpayer has an option, you should use whichever method will result in a larger deduction. It differs from person to person depending on how many miles you drive, the amount of depreciation you are claiming, and all the other expense variables. So just put the numbers together and figure out which will be best for your 2012 tax situation. Generally, claiming the standard mileage rate works results in less paperwork and is best suited for situations in which you drive your car sometimes for work, charity or medical appointments, and you don't want to have to dig up all your car-related expenses.
Here's a very important thing you must know. Just be aware that in order to claim the standard mileage rate tax deduction, you will need to choose that method in the first year that you use your car for business purposes. If you begin in the first year by claiming actual expenses, you'll need to stick with the actual expense method for the as long as the vehicle is used for business purposes.
Car,Truck and other vehicle expenses for self-employed people are reported on Schedule C.
For employees, vehicle expenses are reported on Form 2106. This tax deduction is a miscellaneous itemized deduction, subject to the 2% of adjusted gross income limit. which means, unreimbursed employee expenses are deductible, but you don't get a full 100% expense deduction on your tax return.
For medical use of the car, the 2012 vehicle expenses are reported on Schedule A along with other medical expenses.
For charitable use of the car, the expense is reported on Schedule A along with other charitable donations.
Keeping Good Records for car based 2012 tax deductions
Its very important to keep a record of all your car and truck expenses to prove that you are eligible to deduct your car and truck expenses, you should keep a mileage log. A mileage log should contain the date of each tax-deductible trip you make, stating the number of miles you drove and the purpose of them. And gross them up for the year.
Here is my recommended tax filing method that makes it very easy to claim Tax Ddeuctions for car in 2012