When you donate, you get a tax deduction. Getting a dedication for spending money on donations is one thing, but what about spending money in general?

There are ways that you can get a tax credit or break just for buying a new car this year – but only if that car meets certain requirements. Let’s see the conditions and how to take advantage of them when filing.

Reasons Your Car Could Be Tax Deductible

There are two main reasons why your new car could qualify for a tax deduction or credit.

First, you’ve purchased and are using the car for business. You can deduct the gas mileage vehicle depreciation if you use your own vehicle for work. This deduction applies whether you’re self-employed through Doordash, driving for Amazon, or even driving a bus you’ve purchased for a volunteer position!

The second way your car can qualify for a tax deduction or credit is if it’s an electric vehicle. Recent changes to the federal EV tax credit have changed the qualification requirements for cars, but having a new EV sets you up for a great credit at the end of the year!

Now, let’s discuss the qualifications for deductions and credits and how to file for them.

Qualification Requirements and Tax Forms for Filers

You’ve already learned how to qualify for a business vehicle tax deduction above, so let’s discuss how to file for it. Then we’ll go over qualifications and filing for EVs.

Business Vehicle Mileage Deduction Options

You have two options for deductions for gas mileage and vehicle deprecation: standard mileage rate and actual expense method.

The standard mileage rate says that the cost of operating your vehicle from the start of 2022 to June 30th is 58.5 cents per mile, while the price from July 1st to the end of 2022 is 62.5 cents. All you have to do is keep track of mileage and the business-related purpose of the travel.

The actual expense method separates all the costs of owning and operating – like depreciation, oil changes, insurance premiums, and fuel – with receipts required for each expense. Add it up and multiply by the percentage of miles driven for business purposes to get your deduction.

EV Qualifications and Filing

For your EV to qualify for a tax credit in 2022, it must be new and used primarily for personal reasons in the United States. It also has to have an external charging source, a gross weight under 14,000 pounds, and from a manufacturer who’s sold less than 200,000 EVs in the U.S.

If your electric vehicle qualifies for a tax credit under these circumstances, all you have to do is fill out IRS Form 8936 when you’re doing taxes.

So now that you know how to check your tax dedication qualifications for new vehicle purchases, as well as how to file them to get the most out of your deduction or credit, it’s time to file.

And if you don’t qualify this year, there’s always a new car waiting for next year!