I have question about deducting car loan interest from my tax return. Can I deduct car loan interest if I use my car for business?
Typically, deducting car loan interest is not allowed. But there is one exception to this rule. If you use your car for business purposes you may be allowed to partially deduct car loan interest as a business expense.
If you use your car for business purposes, you may be able to deduct actual vehicle expenses. But you will need to keep accurate records of your business expenses to show proper use of the vehicle. Actual vehicle expenses that may be deducted, when used for business, may include but is not limited to:
Automobile loan interest
Tolls and parking fees
To determine the amount of each actual vehicle expense that may qualify for a tax deduction you will need to calculate the percent of time that the vehicle is used for business. Typically, this calculation is determined by the number of miles driven for business purposes only.
You will have to determine if it is more beneficial to you to use the standard mileage rate deduction or actual vehicle expense deduction. You cannot use both methods.
For individual taxpayers, Schedule A is used in conjunction with Form 1040 to report itemized deductions. If you choose to claim itemized deductions instead of the standard deduction, you would use Schedule A to list your deductions. Your itemized total is then subtracted from your taxable income.
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