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I'm a consultant can I deduct my car expenses? If so what % of my expenses
AI accountant’s answer:
Yes, as a consultant, you can deduct your car expenses related to your business. There are two methods to calculate the deduction: the Standard Mileage Rate and the Actual Expenses method. 1. Standard Mileage Rate: For the 2022 tax year, the IRS standard mileage rate is $0.585 for the first half of the year (January to June), and $0.625 for the second half (July to December). With this method, you multiply the business miles driven by the applicable standard mileage rate to calculate your deductible expenses. You'll need to track and document your business miles driven throughout the year. 2. Actual Expenses method: With this method, you'll need to track and document all car-related expenses such as gas, maintenance, repairs, insurance, depreciation, and more. You will then calculate the percentage of your car's business use to determine the deductible portion of the expenses. To determine the percentage of business use, divide the total business miles driven by the total miles driven for the year. For instance, if you drove 15,000 miles in total and 10,000 were for business purposes, your business use percentage would be 66.67% (10,000 / 15,000). It's important to keep accurate records for whichever method you choose. You can select the method that provides you with the higher deduction, but keep in mind that there are some limitations and requirements for switching between the methods.
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