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Vehicle expense method used in Federal Income tax Schedule C
- Thread starter low2500
- Start date
Carolina Karl
Member
Mileage. I travel about 22,000 miles a year for business (before the coronavirus crisis!), so that's been the preferred method for me per my CPA. Much easier to track, too.
Actual expense for me. 15k miles @ $0.575 = $8625.00. Lease payments are $850/month, plus tires and energy, not to mention tax and all of the other items that count towards vehicle expenses. Even at 90% work utilization (office is less than a mile from home) actual expense is a higher deduction for me.
As always - it depends. Track both for the first year.
As always - it depends. Track both for the first year.
Does this work though canada's program as well for CCA if you have a business.
Also, where do you get the 0.575 number, is that the home charging rate or super charger rate?
OP is in Texas, I'm in Minnesota. $.575 is the federal mileage rate in the US for 2020. Taking the mileage deduction (for me) would result in 15K miles at $0.575/mile.
Just saying that taking the straight-up mileage isn't always better than actual expenses. In my case, it's significantly better to take actual.
Just saying that taking the straight-up mileage isn't always better than actual expenses. In my case, it's significantly better to take actual.
cpa
Active Member
Standard mileage rate for me. Less bookkeeping, and no worries about recapture when I sell the car.
i am not a tax expert but I don't think this is correct. I sold my car in 2019, was using standard mileage deduction. As I was going through TurboTax, I realized that there is a depreciation component within the standard mileage deduction factor (I think it's 0.25 out of 0.575) and when you sell the car, you have to calculate your gain or loss and pay tax accordingly. Check with your tax person/ SW.
cpa
Active Member
I am a tax person; hence my handle on here. You are correct that there is a depreciation component to the standard mileage rate. This lower rate is to be used on a car that has been fully depreciated or on a car that cost so little and has been in service > 6 years. Using the standard mileage rate does not apply under code section 1245.
