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Should You Claim Tax Deductions For Company’s Vehicle Wraps? | Wraps Direct

Should You Claim Tax Deductions For Company’s Vehicle Wraps? | Wraps Direct

 

Vehicle wraps and graphics are popular advertising tools that businesses use to promote their brand and services with eye-catching graphics and text. However, small business owners often wonder whether they can claim tax deductions for vehicle wraps.

 

The type of vehicle and the overall objective of the graphics or wraps will determine the response, which is not simple. Vehicle wraps and graphics that unmistakably advertise the brand and business of a corporation connected to the vehicle are likely to be tax-deductible, according to Chapter 11 of IRS Publication 535.

 

Therefore, if your vehicle is company-owned, you can claim the cost of wrapping it in advertisements as a deductible business expense. However, it is essential to ensure that the graphics or wraps have a clear and direct correlation to your business and its products or services.

 

If you’re considering using car wraps to promote your business, it’s important to understand the tax implications. The following details can help you make an informed decision about whether a car wrap tax deduction applies to your business.

 

Consulting with tax professionals can provide you with insights on whether your business is eligible for a tax deduction for car signage expenses.

 

Now, let’s delve into some important details about tax deductions for vehicle wraps that can assist you in making a well-informed decision.

 

 

Can You Deduct the Cost of Vehicle Wraps and Graphics From Your Taxes?

 

If you’re a small business owner who is considering the application of vinyl wraps or graphics to your fleet, you might be wondering whether the cost is tax deductible. For business owners who have invested in vinyl wraps, it’s natural to ask yourself the question, “Can I file for advertising and promotion tax deductions?” The good news is that if the primary purpose of the vinyl wrap is for marketing and/or advertising, then the cost of the decal or wrap is likely a tax-deductible business expense.

 

According to IRS guidelines, a business expense must be both ordinary and necessary to be deductible. Since vehicle wraps and graphics are a common and effective way for businesses to promote their brand and increase visibility, they can be considered an ordinary and necessary expense for the business.

 

In summary, if you’re using vehicle wraps and graphics as a marketing tool for your business, then you may be eligible to deduct the cost of the decal or wrap from your taxes. However, it’s important to consult with a tax professional to ensure that you meet all the necessary requirements for the deduction.

 

 

 

 

Key Information About Tax Deductions For Vehicle Wraps

 

When you hire an experienced fleet wrap installer, such as Wraps Direct, you’ll pay for the graphic design, production, and installation of fleet graphics. These vinyl graphics will contain branding images, marketing messages, and your business logo, as well as contact information displayed on the exterior of your company vehicles. These symbols and messages are forms of advertisements, which the IRS considers fully tax-deductible.

 

However, it’s important to note that merely installing fleet graphics won’t always qualify as tax-deductible, as it must be deemed as “reasonable and “ordinary” under IRS Publication 535 Business Expenses. Here are some rules to keep in mind:

 

  • The IRS considers all forms of business advertising as tax-deductible, which includes but is not limited to vehicle wraps, company license plates, stickers, decals, and placards.

 

  • A company vehicle that displays advertising graphics publicly can be considered a form of advertising.

 

  • Simply putting advertising or any display material on a vehicle does not necessarily make it solely for business use. Therefore, if you use the vehicle for personal purposes, you cannot consider the mileage as a deductible expense for your business.

 

  • You may only consider the use of your vehicle as a business expense if you drive it and use it for business-related tasks and similar activities.

 

  • Fleet graphics installed on company vehicles are considered advertising and thus can qualify for a car signage tax deduction.

 

  • You can only claim mileage as a tax-deductible expense when it is used for business purposes, including advertising and promotion. Therefore, it’s important to keep track of the business miles used for advertising. However, commuting from home to work and vice versa for employees using company vehicles is not considered tax-deductible.

 

In most cases, wrap fees are tax-deductible. However, it’s crucial to keep your receipts after installing fleet graphics or any maintenance work, as they can be used as tax-deductible expenses. You should also consult with your tax advisor to ensure that the use of your car and the mileage qualify for a tax deduction. Vehicle wraps and graphics are an inexpensive and potentially tax-deductible way of advertising. However, you’ll need to provide evidence that shows that the usage of your fleet-wrapped commercial vehicles is strictly promotional in nature.

 

 

Tax Deductibility For Personal vs. Commercial Vehicles

 

If you have a business car or truck and use the services of a specialized sign and wrap company to add your business’s sticker, social media handles, or other contact information to it, then the cost of wrapping the business car is a legitimate tax write-off according to IRS Publication 535. This qualifies as an advertisement, and you can claim the entire cost of the wrap as a tax deduction.

 

However, if you add marketing messages to a personal vehicle, the tax deduction is only partial. You may only be able to claim a portion of the cost, and you cannot record business mileage on these vehicles as advertising expenses. According to the IRS, placing advertisements on personal vehicles does not change the vehicle’s category to “commercial,” so you cannot deduct expenses for using it to commute to work or for other personal activities.

 

If you want to learn more about IRS deductions and allowances for personal vehicles, you can read Chapter 4 of IRS Article 463 or consult an experienced tax advisor.

 

 

 

 

How Do I Deduct Expenses For Vehicle Wraps?

 

Deducting expenses for vehicle wraps can be done in various ways. You can deduct the cost of wrapping your business vehicles with advertising artwork. For instance, if you pay $800 to add your business logo and contact information to your car, you can legally deduct that amount from your taxes. It’s important to retain the receipt for the vehicle wrapping project in case you need to prove the expense.

 

You can also track and claim corporate miles used for marketing purposes, but it’s important to be accurate and not overestimate your allowances. Knowing which tax write-offs are permitted can help you maximize your company’s fleet for tax breaks.

 

However, it’s crucial to note that adding advertising to your vehicle does not entitle you to full tax write-offs. You can only track and claim business-related use and expenses. Personal miles, such as using the vehicle to commute to work, are not deductible. The court has previously ruled in favor of the IRS that businesses cannot simply deduct 100% of their car expenses solely because the vehicle bears promotional messages.

 

You can deduct a vehicle’s use for business trips and transportation of business materials as an advertising expense. You can establish the share of business use by recording your corporate mileage. Additionally, you can calculate how much you can deduct by multiplying the annual vehicle bills, such as gas, insurance, depreciation, repair, and maintenance, by the share of business use. Alternatively, you can choose to claim the standard mileage only and keep a mileage log. Consulting an accountant can help you determine the best method to use. It’s essential to claim only legal tax breaks to avoid penalties or legal issues.

 

 

Qualifying Auto-Graphics For Advertising Deduction

 

To claim a tax deduction, vehicle graphics of any kind, including decals, partial wraps, and full wraps, must clearly promote the brand.

 

Even simply placing company stickers and contact information on a work vehicle qualifies as an ordinary and necessary tax-deductible expense.

 

To substantiate your claims, it is important to retain the receipt of any vehicle wrapping or graphics project, in case you are audited.

 

Work vehicles are those that are purchased or leased for work purposes, such as cars, vans, and trucks. Branded vehicle wraps on these types of vehicles are the most common.

 

If you are unsure of whether certain business vehicles qualify for tax deductions on advertising expenses, it’s best to consult with a business tax accountant.

 

 

 

 

Avoid Common Tax Deduction Mistakes

 

When it comes to claiming vehicle wrap tax deductions, there are common mistakes that business owners should avoid in order to prevent penalties or legal issues. Here are some tips:

 

  • Don’t try to deduct everyday wear and tear on your vehicles. This isn’t considered a tax-deductible expense, but regular and scheduled fleet wrap maintenance can be.

 

  • Remember that personal use of your company vehicle, such as driving your kids to school or going on weekend trips, isn’t tax-deductible.

 

  • Keep all your receipts related to your vehicle wraps and other business expenses. Consult with your accountant or tax attorney to determine which expenses are eligible for tax deductions based on specific tax codes in your area.

 

By avoiding these common mistakes, you can ensure that you are accurately claiming tax deductions and avoiding any legal issues related to tax compliance.

 

 

Tax Deductions For Commercial Vehicle Wraps

 

Wrapping commercial vehicles is a great way for small businesses to make the most out of their fleet, while also claiming the project expenses as tax deductions. The IRS allows businesses to deduct the cost of decaling or wrapping commercial vehicles from their tax liability. This includes a variety of business vehicles, such as automobiles, vans, trucks, airplanes, motorcycles, and even golf carts. Corporate mileage used for advertising can also be recorded and claimed, but it is important to keep receipts for any expenses incurred. To ensure that you’re correctly claiming tax deductions, it’s advisable to consult an experienced tax advisor.

 

When selecting a vehicle wrapping company, choose a reputable, and skilled company that can create eye-catching designs with clear and concise information that references your company’s intent. You can also request to see previous work and client feedback to assess the quality of their services. Additionally, there are various designs and colors to choose from, so don’t limit your imagination, and decide on a design that best represents your business.

 

 

 

 

Boost Your Business Branding & Advertising With Tax-Deductible Commercial Fleet Wraps & Graphics

 

Located in Jacksonville, FL, Wraps Direct provides nationwide shipping and installation services for vinyl wrap across the continental United States! Wraps Direct also specializes in designing custom premium vehicle wraps that supply an effective advertising solution for your business.

 

Our team of wrap experts takes pride in providing quality products with long-lasting durability, and we equip you with essential kits and tools to maintain and extend the lifespan of your investment. Additionally, our products come with a warranty, leaving you with peace of mind.

 

We also provide proper documentation and receipts for your tax returns, ensuring that you can claim your fleet wrap as a tax-deductible expense. Contact our vinyl wrap experts at (904)-579-3452 or fill out our contact form to receive professional advice and information. Start maximizing your business potential with our cost-effective and tax-deductible fleet wraps today!