SUV costs are a large item in the expenses of employees and the self-employed. Even though the biggest item is acquisition costs, recurring expenses should not be underestimated. Many professionals can deduct these expenses from their taxes on a pro-rata basis and reduce their tax burden by taking credit for these expenses. But very few people make use of this in their private vehicles.
Which costs are tax deductible and in which amount?
Tax deduction options are based on percentage of business use. In order to qualify for a tax credit, at least 50% of the SUV must be used for business purposes by self-employed persons and between 10% and 50% by employees. Business use includes, for example, daily travel to work, as well as business trips in a private vehicle. If a self-employed person uses the privately purchased SUV more than 50% for business trips, it is automatically classified as business assets.
With a proportionate operational use a tax credit is possible on a proportionate basis, which is also advantageous and tax-reducing. But even for employees, offsetting the business use of an SUV originally purchased privately proves to be a tax-saving model.
At 30 cents per kilometer driven, the daily commute to work is charged, while vehicle liability and accident insurance, as well as vehicle tax for employees, are charged at a maximum of 1.900 EUR per year are chargeable. Self-employed persons can also receive up to 2 months' tax deduction if they use their SUV exclusively for private purposes.Declare 800 EUR per year and achieve a tax saving this way.
The best way to find out which options exist in individual cases is to consult a tax advisor or an income tax assistance association. Car expenses can also be deducted if you prepare the tax return yourself and concentrate on the maximum amounts that can be deducted annually.
SUV expenses in taxes – an underestimated item among many professionals
Image by Bruno /Germany on Pixabay
While companies keep their vehicles as business assets and claim all costs for tax purposes, employees and the self-employed not infrequently forgo this option. Here, the credit is worthwhile even if the SUV is used only to a small extent for the job. Even a pro-rata offset via the tax return has a positive effect on the tax burden to be paid.
The four noteworthy and deductible items of car expenses refer to:
- the motor vehicle tax
- Motor vehicle liability
- the vehicle acquisition costs (in the case of full or pro rata business use)
- the distance allowance.
If the acquisition costs should also be taken into account for tax purposes, self-employed people usually resort to the 1% calculation and depreciation method. This means that from the purchase price a monthly usage share of 1% will be deducted for tax purposes.
The method is applied regardless of the actual kilometers driven, but its implementation is less complicated for the self-employed than the amount-based imputation, for which a logbook must be kept. Which method an individual chooses is up to the individual and based on the greatest tax advantage. Since the tax offices look very closely at a proportionate professional vehicle use, the 1% method is usually less complicated than the separation of private and professional use of the SUV documented with a driver's logbook.
Both self-employed and employees, who have so far completely waived the deduction of SUV costs, should check their options and find out what savings are possible in the next tax return.