Buying A New Car

[Jenniferdawn]

We are buying a new car with more seating capacity specifically for my daycare, but I will still be using it as a family vehicle as well. Since we are buying a larger car specifically for daycare purposes, how can we deduct this?

[Michael]

Welcome to the Daycare.com Forum Jenniferdawn! I've upgraded your status. You can post freely now.

[TomCopeland]

car expenses

The reason you buy a car doesn't affect how you claim expenses for it. You can use either the standard mileage method or the actual cost method to determine your business deductions.

If you use the standard mileage method you can claim $.555 per mile (July-December 2011; $.51 January-June), plus the business portion of car loan interest and personal property tax on the car, plus parking expenses.

If you use the actual expenses method you can claim the business portion of all expenses associated with the car: gas, oil, repairs, insurance, car loan interest, depreciation, and so on.

Most providers use the standard mileage method because it easier to keep records. Most providers would probably claim a higher business deduction if they used the actual expenses method.

[Unregistered]

Thanks for the welcome Michael, and thank you Tom for your help.

How do I figure out the business portion of the car loan interest?

Also, if I claim the actual expenses, how do I determine the business portion of gas, oil, etc. verses what my family uses it for?

I'm sure you get these questions asked a million times. I'm new to the daycare business so I'm planning on going back through these threads so I won't ask too many repeats.

[Michael]

Thanks for the welcome Michael, and thank you Tom for your help.

How do I figure out the business portion of the car loan interest?

Also, if I claim the actual expenses, how do I determine the business portion of gas, oil, etc. verses what my family uses it for?

I'm sure you get these questions asked a million times. I'm new to the daycare business so I'm planning on going back through these threads so I won't ask too many repeats.

Be sure to login in order to post freely.

Here are a few TAG links that may answer this until Tom does:

Car Deductions - https://www.daycare.com/forum/tags.p...eduction+-+car

Time Space Percentage: https://www.daycare.com/forum/tags.p...ace+percentage

[TomCopeland]

car expenses

The business portion of car expenses are determined by dividing the number of business miles you drove by the total number of miles you drove. So, if you drove 2,000 business miles and 10,000 total miles, your business portion is 20% and you get to deduct 20% of car loan interest using the standard mileage rate, and 20% of all actual expenses, using the actual expenses method.

Business miles are those trips in which the primary purpose of the trip was business (ie. more than 50% of the purpose of the trip is for business).

[care-care]

Tom What if you bought a car and paid cash for it? and dint takeout a loan?

[TomCopeland]

Car expenses

If you have paid off your car, you don't have any car loan interest to deduct. Congratulations! You can still depreciate it, if you are using the actual expenses method to claim expenses.

[athomemommy]

I am new here and just figuring out this tax stuff. I need the receipts to do the actual cost. Or can I use my bank statements since we usually pay with debt.

[TomCopeland]

Bank statements

Receipts are your best evidence of an expense. Bank statements may work, but they are not the best. If the bank statement says you spent $40 at the ABC gas station, how do we know this is for gas and not food? Try to save receipts.

[Unregistered]

The reason you buy a car doesn't affect how you claim expenses for it. You can use either the standard mileage method or the actual cost method to determine your business deductions.

Business miles are those trips in which the primary purpose of the trip was business (ie. more than 50% of the purpose of the trip is for business).

Hmmm... Do these two things, put together, mean that I can't deduct any auto expenses? I have 3 kids and also provide care for 1 other, and am buying a car that can actually seat all 4 so that we can do stuff during the day (zoo, museum, etc.), but it seems I won't meet that 50% rule, since 3/4 of the kids are my own.

[Cradle2crayons]

Hmmm... Do these two things, put together, mean that I can't deduct any auto expenses? I have 3 kids and also provide care for 1 other, and am buying a car that can actually seat all 4 so that we can do stuff during the day (zoo, museum, etc.), but it seems I won't meet that 50% rule, since 3/4 of the kids are my own.

No, it doesn't matter how many kids in the vehicle are yours, only te purpose of the trip as to whether you can deduct he mileage.

For instance, say you decide to go on a field trip to the zoo.... And out to eat afterwards. Then as you are passing the bank, oops you need to make a deposit. Yu can still claim the mileage as business because you were on the way to the zoo on a field trip. However, if you are only taking your own kids to he zoo, you can't deduct. Or if you are out on personal errands and make a quick stop at the park. If your purpose for the trip was personal errands then you can't deduct.

[Unregistered]

Thanks. That's helpful!

[TomCopeland]

car expenses

No, it doesn't matter how many kids in the vehicle are yours, only te purpose of the trip as to whether you can deduct he mileage.

For instance, say you decide to go on a field trip to the zoo.... And out to eat afterwards. Then as you are passing the bank, oops you need to make a deposit. Yu can still claim the mileage as business because you were on the way to the zoo on a field trip. However, if you are only taking your own kids to he zoo, you can't deduct. Or if you are out on personal errands and make a quick stop at the park. If your purpose for the trip was personal errands then you can't deduct.

Yes, well said. What matters is what is the primary purpose of the trip, business or personal.