Using Fuel Cards to Help Write Off Business Vehicle Expenses
By MMP on Apr 15, 2011 in Parts & Accessories, Repair & Service
In order to be able to include vehicle expenses in your tax return, you will need to have a way to track the money you are spending for the purpose of write-offs. This is where fuel cards come in handy. You can use these cards for more than gas and if your drivers use the cards to cover expenses, the tracking process will be easier.
By using fuel cards for all expenses related to business vehicles, you will be able to better track tax deductible items. By putting all expenses into one account and onto one card, you will be able to track and file expenses accordingly. Even if you do not get receipts, you can view purchases on the monthly statement. This will allow you to be able to better sort and organize the bills you have and allow you to save money when taxes are due.
Being able to track expenses on fuel cards will help you to know not only where the money is going, but also better determine which expenses are in fact tax deductible. All service to the car, including car washes and repairs, is tax deductible. This is especially true if you are running your own business and providing vehicles for your employees. Being able to track how your money is being spent, as well as what can be used in the form of tax returns, will allow you to be better prepared in the event of an audit.
If you are facing questions from the IRS after you have filed your taxes, you will easily be able to show records of vehicle expenses. Knowing where the money is going and having a file of the expenses show that you are not trying to cheat the system.
Having a system in place to track your expenses will also let you know which cars in your fleet will need to be replaced. As you notice more expenses for repairs and more frequent trips to the gas station, you will want to consider replacing that vehicle. You can monitor this by reviewing fuel card bills to see what types of service needs to be done and how often it is required to maintain the vehicles.
Tracking expenses on fuel cards allows you to know, not only what you will be able to claim in regards to tax discounts, but also where your money is going. Consider it as a way to make sure that employees who are using your cars are doing the right thing and that you are getting the most out of the money you are spending to maintain the vehicle. This tool works in many ways to aid and assist you in running your business.