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Vehicle expense method used in Federal Income tax Schedule C

low2500

Member
Nov 29, 2019
35
19
Houston
Wonder to poll owners who use their vehicles for business which expense method is selected in Schedule C, actual expenses v Mileage method?
 

low2500

Member
Nov 29, 2019
35
19
Houston
Actually, I can't imagine anyone pick actual expense over the mileage method. I get free charging so my actual expense is minimal.
 

AGARubberDuck

Member
Nov 19, 2019
59
66
MN
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.
 

Posti101

Member
Jan 29, 2020
68
19
Alberta
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.
Does this work though canada's program as well for CCA if you have a business.
 

AGARubberDuck

Member
Nov 19, 2019
59
66
MN
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.
 

low2500

Member
Nov 29, 2019
35
19
Houston
I was 100% wrong, I should take the actual expenses because the mileage method will not allow me to take the depreciation. The Taxcut software says my second full year depreciation is $15,000, plus other expenses.
 

low2500

Member
Nov 29, 2019
35
19
Houston
BTW, I pay $0 for charging at home because I enroll in the FREE Nights plan at Infuse Energy.

(moderator note: removed referral code, not allowed to post those here)
 

Neo101

Member
Mar 20, 2019
42
30
Milwaukee
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
May 17, 2014
3,028
3,748
Central Valley
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.

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.
 

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