It's Time to Record Your Vehicle's Odometer Reading

I always enjoy talking about deducting vehicle expenses with family child care providers because nearly everyone can save money on their taxes by following a few simple rules.

On December 31st of each year you should record the odometer reading for each car, truck or van you use in your business. File this information with your tax records. Next, record the odometer readings as of January 1st and file this with your next year tax records.

You want to record odometer readings at the beginning and end of each year so you can calculate the total number of miles you drove your vehicle in the year. This will be used to help determine the percentage of miles you drove for business purposes each year. If you use the standard mileage method of claiming vehicle expenses you can deduct this business percentage of your vehicle loan interest and vehicle property tax.

If you use actual mileage method of claiming vehicle expenses you can deduct the business percentage of all your vehicle expenses (gas, oil, repairs, insurance, vehicle depreciation, loan interest, and so on).

If you didn't record the odometer reading of your vehicle on January 1st, try to estimate it for purposes of claiming vehicle deductions. If you serviced your vehicle close to this date, look on the work invoice where the odometer reading may be recorded. You can always take the total number of miles you have driven the vehicle since you owned it and divide it by the number of months you've owned it. Multiply this average monthly mileage by 12 to estimate your annual mileage.

Vehicle deductions can add up quickly so it pays to keep accurate odometer readings each year.

Tom Copeland - www.tomcopelandblog.com

Image credit: https://www.flickr.com/photos/greggjerdingen/6697106333

For more information, see my book Family Child Care Record Keeping Guide.