Threeboy
04-02-2008, 01:30 PM
http://farm1.static.flickr.com/206/463029948_a8481a79ca_m.jpg (http://www.flickr.com/photos/lambj/463029948/)So tax time for Canadians is just around the corner. I filled last month (surprisingly) but the tax peeps always tell me I should be writing off my car use as a business expense.
I know what you're thinking... How can a home based web/graphic designer write off car use? Well, for starters I've gotta go to the bank to deposit cheques, check my mailbox for business related mail as well as buy business gear & supplies from time to time. All of that adds up throughout the year, why not let it help you at tax time?
To write off car use as a business expense requires some logging:
Overall Car Use (Odometer)
I have to log the odometer at the start of the year and at the end of the year so I can get an idea of how many kilometers I've driven for the year.
Business Car Use (Trips)
I then have to log each business related trip I take through the year to get an idea of how many kilometers were business related.
Receipts
Then I have to save all the insurance, repair and gas receipts (I do this anyway) so I have a record of what I spent on the car.From the overall use and the business trip use I can derive a percentage to figure out how much of the car costs are business related.
I didn't log in the past because I forgot and because I was lazy. I started logging this year and it's not that bad! It's just become part of my regular book keeping routine of saving receipts and updating my records. Also my car is insured for "pleasure use only" which only allows 6 business related trips a month so logging is a good way to make sure I don't go over this limit.
Extremely roughly speaking here's what I'm thinking my car expenses will be this year:
Insurance - $1200
I insure my car as "pleasure use only" and limit it so only people with 10 or more years safe driving can drive it to keep the insurance costs down.
Gas - $900 - $1300
My car isn't too bad on gas but the prices continue to rise, and a tank lasts me 2-3 weeks!
Maintenance - $300 to $500
Oil changes and minor things.
Repairs - $1000 - $2000
If something major bunks out or things like replacing the breaks. Every time something major goes wrong with my car I have to weigh whether or it's financially worth keeping my car since it's over 10 years old.So let's say I spend $4000 on my car this year, depending on the business use I can write off:
$200 with 5% business use
$400 with 10% business use
$1000 with 25% business use
$2000 with 50% business useSo for my own purposes I'm not expecting the business use of my car to be a huge percentage (I'm expecting 5% or so) but the costs of owning and maintaining a car is pretty high so any percentage helps.
Too bad I can't write off this blog post!
I know what you're thinking... How can a home based web/graphic designer write off car use? Well, for starters I've gotta go to the bank to deposit cheques, check my mailbox for business related mail as well as buy business gear & supplies from time to time. All of that adds up throughout the year, why not let it help you at tax time?
To write off car use as a business expense requires some logging:
Overall Car Use (Odometer)
I have to log the odometer at the start of the year and at the end of the year so I can get an idea of how many kilometers I've driven for the year.
Business Car Use (Trips)
I then have to log each business related trip I take through the year to get an idea of how many kilometers were business related.
Receipts
Then I have to save all the insurance, repair and gas receipts (I do this anyway) so I have a record of what I spent on the car.From the overall use and the business trip use I can derive a percentage to figure out how much of the car costs are business related.
I didn't log in the past because I forgot and because I was lazy. I started logging this year and it's not that bad! It's just become part of my regular book keeping routine of saving receipts and updating my records. Also my car is insured for "pleasure use only" which only allows 6 business related trips a month so logging is a good way to make sure I don't go over this limit.
Extremely roughly speaking here's what I'm thinking my car expenses will be this year:
Insurance - $1200
I insure my car as "pleasure use only" and limit it so only people with 10 or more years safe driving can drive it to keep the insurance costs down.
Gas - $900 - $1300
My car isn't too bad on gas but the prices continue to rise, and a tank lasts me 2-3 weeks!
Maintenance - $300 to $500
Oil changes and minor things.
Repairs - $1000 - $2000
If something major bunks out or things like replacing the breaks. Every time something major goes wrong with my car I have to weigh whether or it's financially worth keeping my car since it's over 10 years old.So let's say I spend $4000 on my car this year, depending on the business use I can write off:
$200 with 5% business use
$400 with 10% business use
$1000 with 25% business use
$2000 with 50% business useSo for my own purposes I'm not expecting the business use of my car to be a huge percentage (I'm expecting 5% or so) but the costs of owning and maintaining a car is pretty high so any percentage helps.
Too bad I can't write off this blog post!