Can_You_Write_Off_Car_073013

Can you write off your rental car?

Tuesday, July 30, 2013 9:45:04 AM

When you own a small business or do quite a bit of business travel representing a larger corporation, it's always a good idea to look for ways to save. Many road warriors rely upon car rentals to get around in the cities that they visit, and their employers may be able to save money by writing off the rental car.

While car rentals clearly fall under the category of travel expenses, the Internal Revenue Service draws a fine line between what constitutes an acceptable tax write-off and what does not.

Whether you use the car rental for business travel or day-to-day company activities, the primary purpose for its use must be business related. If the rental car is used for personal reasons at any point, a comparable percentage of the rental car cost must be subtracted from the tax deduction.

Of course, if you or your employer plan on writing off rental car expenses come tax season, you'll need to maintain detailed records that can be presented to the IRS. Be sure to hold on to all rental receipts, as well as receipts for any fuel or maintenance costs.