IRS Warning: Using a Company SUV for School Runs Could Be Tax Evasion

Using a company SUV to drive your kids to school might not seem like a big deal — until the IRS gets involved. While tax deductions are available for vehicles used in business, mixing work and personal use without proper documentation can quickly raise red flags. The IRS has strict rules on what’s considered deductible, and luxury SUVs or company vehicles often attract extra scrutiny. Here’s how it works — and how to stay compliant.

How SUVs and Tax Deductions Collide

SUVs used for business may qualify for tax deductions under Section 179 of the U.S. Tax Code. But these deductions come with limitations and conditions, especially for high-cost, heavy vehicles. If you drive a luxury SUV or pickup and claim it’s for business use, the IRS will expect detailed records to back that up.

Section 179 Deduction Limits for SUVs

Section 179 allows businesses to deduct up to $1,250,000 in 2025 for qualifying property. However, there’s a major caveat for SUVs. If your vehicle weighs between 6,000 and 14,000 pounds — such as a Cadillac Escalade or Lexus GX — the maximum first-year deduction is capped at $31,300.

By contrast, vehicles like cargo vans or pickups with a bed of at least 6 feet can potentially qualify for the full deduction — if they are used at least 50% of the time for business.

Vehicle Type	Weight Class	Deduction Limit (2025)	Business Use Required
SUV (6,000–14,000 lbs)	Heavy Vehicle	$31,300	50% or more
Pickup with 6-ft bed	Heavy Vehicle	Up to $1,250,000	50% or more
Passenger car (<6,000 lbs)	Light Vehicle	Lower limits apply	50% or more

Failing to maintain the 50% business-use threshold can trigger a recapture of depreciation, meaning you’ll owe back taxes on the benefit you originally received.

Personal Use Raises IRS Flags

The IRS gets particularly cautious when a company vehicle is also used for personal errands — like grocery runs or school drop-offs. These personal miles must be tracked and added to your taxable income if the vehicle is provided by an employer.

This is detailed in IRS Publication 15-B, which says that any personal use of a company car must be valued and reported on the employee’s W-2 Form (Box 1) as taxable income. Additional reporting might appear in Box 14 or be labeled as “PUCC” (Personal Use of Company Car).

Three IRS-Approved Methods to Value Personal Use:

1. Cents-per-mile rule
2. Annual lease value rule
3. Commuting rule (for restricted use)

Each method requires clear mileage logs that detail:

• Date of trip
• Odometer readings
• Destination
• Purpose (business or personal)

Without proper documentation, the IRS may disallow deductions or impose a 20% penalty, plus interest and other fines for payroll errors.

How the IRS Cross-Checks Vehicle Use

To catch excessive or unusual deductions, the IRS uses something called vertical analysis — comparing your mileage and expenses to others in similar jobs. If your claimed business miles seem inflated, especially for high-end SUVs, that’s likely to trigger an audit.

Also, commuting from home to a regular job site is considered personal use and is not deductible, even if you’re driving a work vehicle.

TurboTax and DIY Software Can Help — But Only If You Know the Rules

Software like TurboTax can guide you through vehicle-related deductions, but it won’t protect you from penalties if your information is inaccurate. You’re responsible for keeping logs and proving that your claimed business use is valid.

Bottom Line: Keep It Clean and Document Everything

Whether you’re a self-employed contractor driving a pickup or an employee using a company Lexus, the key to staying on the IRS’s good side is documentation. Mixing personal errands with business driving — especially in a luxury SUV — can look like tax evasion if you’re not careful. Always maintain clear records, know the deduction rules, and never assume the IRS won’t check.

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