Dear Driving for Dollars,
I am a self-employed painter in the market for a new van. Can I deduct the purchase price when I file my federal taxes?
As a self-employed person using his truck for business purposes, you can use your car as a tax deduction. In fact, there are several available to you as you prepare your federal income tax return, including license and registration fees, fuel, oil, repairs, parking fees and tolls. As far as the cost of the vehicle itself, the IRS allows self-employed individuals to a tax deduction equal to the percentage of interest expense that represents your business use of the car. In other words, if you use your car for business 60 percent of the time and 40 percent for your personal use, you can deduct 60 percent of the interest. You may also qualify to deduct the depreciation of the vehicle over multiple years, if certain requirements are met. Review the “car expenses” section of IRS Publication 463 or talk to a qualified tax adviser before you make your purchase to help determine if you’ll meet the requirements and what deductions you can claim.
Read more Driving for Dollars columns and Bankrate auto stories. Tara Baukus Mello is a freelance writer who has written about automotive topics of interest to consumers since 1995. If you have a car question, e-mail it to us at Driving for Dollars.