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Is buying a car a tax write-off?
I’m an independent contractor, and I bought a new car last year to help conduct my business more efficiently. Since I’m using it as a part of my job, can that come off my taxes? Is buying a car a tax write-off?
Shannon Fitzgerald · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congrats on the new wheels! While you can’t write off the total cost of your investment,
buying a new car
for work does come with some tax write-off options. The IRS allows this through Section 179 of Form 4572, which lets taxpayers write off certain property expenses as business expenses. Because most purchased vehicles serve personal purposes alongside their business purposes, there are certain limitations in place:
- You can only deduct the percentage the car is used for your business
- It must be used for business at least 50% of the time
- It must weigh less than 6,000 pounds
Depending on your job and vehicle costs relating to your job, you may even be able to write off other expenses like your sales tax, gas, insurance, and maintenance. Be sure to keep records of receipts, however, to help distinguish between personal and tax-deductible business expenses.
When in doubt, it’s always a good idea to work on your taxes with an accountant to get a better understanding of where you can save.
If you’re looking to save on insuring your new car,
Jerry
can help you find the lowest car insurance rates available. The app is free to use and instantly compares custom quotes from over 50 top insurance companies so you can be confident you’re getting the best price for your coverage. The average user ends up saving $887 a year on
car insurance
so it’s definitely worth a look! View full answer
- Gregory R.
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