Eligibility

• Before you write off a vehicle that you use for a business you own, you must ensure that you're eligible for the write-off. In most cases your vehicle will qualify you for a tax deduction, which reduces your taxable income. Each year the tax code specifies the maximum deduction allowed for business use of a vehicle, and this applies whether you own the business or not. If you have employees who spend their own money on vehicles for your business, you as the owner can't write off their expenses on your taxes.
  
  

Filing

• You'll also need to determine whether you'll write off your business vehicle expense on your personal income taxes or your business income taxes. If you are self-employed, purchased the vehicle with personal funds and use it for a combination of business and personal tasks, you can include it on your personal income tax by deducting the percentage of personal money spent on business use, including a portion of the insurance, registration, fuel and maintenance costs. If your vehicle belongs to your business and you paid for it with company money, you must write it off on your business income taxes but you can subtract the full cost of purchase and operation.
  
  

Mileage Rate

• The IRS provides a standard mileage rate that you can use to determine how much of a write-off to take on your business's vehicle. The standard mileage rate only applies when you own a business that doesn't operate a taxi service or fleet of vehicles for hire. It is inclusive of the costs associated with a business car but you can add the cost of parking fees and tolls to your deduction. Instead of the standard mileage rate, you can choose to compute the actual cost of operation for a vehicle your business operates. This includes the cost of fuel, insurance, maintenance, purchase and financing.
  
  

Process

• Once you know how much to write off for your business's vehicle, you must enter it in the proper place on your tax form. In the tax code language, your vehicle costs are a business expense. Where you enter this information will depend on whether you use the write-off on business taxes or personal income taxes and which form you use. It will likely appear on a worksheet or schedule that determines your net loss or profit, which you will then enter on the tax form itself. It is essential that you only write off eligible vehicle expenses that your business's financial records support, since you'll need to explain how you arrived at your figures if you ever face an audit.