How Do You Calculate Depreciation Of Car For Business Use?
Depreciation is the bookkeepers’ way to account for asset usage. That is, it is a way for businesses to account for the wear and tear on an asset over time. It is also a better way to match revenues with expenses, an important accounting quality standard. Depreciation on a car is calculated in the same way as most other assets, and the Internal Revenue Service (IRS) provides guidance on the best methodology to use from their perspective. Determine that portion of the car usage is for business vs. personal. Only the business portion of the car can be depreciated on your tax return. For example, if you use your car 70 percent for personal use, depreciation can be claimed on 30 percent of the cost. Use the Modified Accelerated Cost Recovery System (MACRS) to calculate depreciation. While there are several other depreciation methods, this is the one the IRS advises. You will need to know the original cost of the car, and the life of the car (how long can you use it). This will allow you to
