Welcome to another enriching episode of Tax Blueprints, hosted by Daniel Rohr, a veteran CPA and financial planning guru at Rohr & Associates, a top-tier CPA firm in California. In today’s discourse, we meticulously unravel the complexities of auto expenses as they relate to business tax deductions—a topic inundated with questions and often shrouded in ambiguity.
Whether you’re a business owner who frequently hits the road for work, or an entrepreneur making an investment in a new vehicle, understanding the labyrinthine rules surrounding auto expenses is paramount for optimal tax savings. In this episode, Daniel dissects the two main avenues for deducting these costs: the Actual Expense Method and the Standard Mileage Rate, using illustrative examples to shed light on how each calculation works and which might be the best fit for your specific situation.
Switching gears, we also delve into the integral subject of mileage logs. Whether you opt for the Actual Expense Method or the Standard Mileage Rate, a meticulously kept log is not an option—it’s an IRS mandate.
In addition to clarifying these methods, we explore the seldom-discussed nuances of switching from one method to the other, especially with leased vehicles. Daniel explains the intricacies of this rule and identifies the limited exceptions allowed by the IRS.
Lastly, the age-old debate: To buy or to lease? Daniel walks us through the pros and cons of each choice, touching on points such as depreciation, tax benefits, and monthly payments. He also demystifies the tax implications of leasing, offering insights that could sway your next big auto investment decision.
Disclaimer: The content provided in this episode of Tax Blueprints is intended for informational purposes only and does not constitute legal, tax, or financial advice. Before making any decisions regarding the topics discussed, you should consult with a qualified professional to ensure that individual circumstances and needs are taken into account.