If you use your car for business purposes, you ordinarily can deduct expenses related to the car or truck.Actual expenses include the cost of gas, oil, repairs, insurance, and depreciation on a vehicle. To determine the amount of car and truck expenses that can be included in actual expenses or the total business expenses reported on Schedule C, Schedule C-EZ, Schedule E or Schedule F you must use one of the following two methods:
- Standard mileage rate - See the rates in the standard mileage rate chart.
- Actual car expenses - If you do not use the standard mileage rate, you may be able to deduct your actual car expenses.
See Publication 463 to determine which method you qualify to use.
To enter actual vehicle expenses as an unreimbursed business expense for state returns that allow them as a deduction, from the Main Menu of the tax return (Form 1040) select:
- Itemized Deductions
- 2% Deductions and Job Expenses (2106)
- Employee Business Expenses - 2106
- Select either Taxpayer or Spouse
- Enter the Type of Occupation
- Select Vehicle Expenses
- Enter the Description, Date Vehicle was placed in Service, and the requested mileage numbers
- In the "Form 2106 Vehicle Information Menu", select Actual Expenses and enter the amounts as appropriate
To report actual expenses for a reservist on Form 2106, from the Main Menu of the tax return (Form 1040) select:
- Adjustments
- Business Expenses of Reservists (2106)
- Select either Taxpayer Business Expense Deduction or Spouse Business Expense Deduction
- Enter the Type of Occupation
- Select Vehicle Expenses
- Enter the Description, Date Vehicle was placed in Service and Mileage
- In the "Form 2106 Vehicle Information Menu", select Actual Expenses and enter the amounts as appropriate
To report actual expenses on a Schedule C that has already been created (see here for instructions), from the Main Menu of the tax return (Form 1040) select:
- Income
- Business Income/Loss (Sch C, 1099MISC)
- Expenses
- Car & Truck
- Car & Truck (Actual Expenses - Schedule C)
- Select New or double-click the entry you wish to Edit.
- Actual Expenses paid should be entered in the box provided.
To report actual expenses and depreciation on a Schedule C that has already been created (see here for instructions), from the Main Menu of the tax return (Form 1040) select:
- Income
- Business Income/Loss (Sch C, 1099MISC)
- Expenses
- Depreciation
- Depreciation Module
- New or double-click the entry you wish to Edit
- Enter all Depreciation Data, select OK
- Select Listed Property and select the type of listed property.
- Enter all mileage information. This will determine the percent of business use.
- Enter the amount of actual expenses paid. If you would like to create an itemized list of the expenses, press F10 on your keyboard and make an entry for each expense.
To report actual expenses on a Schedule E that has already been created (see here for instructions), from the Main Menu of the tax return (Form 1040) select:
- Income
- Rents, Royalties, Entities, (Sch E, K-1, 4835, 8582)
- Rents and Royalties
- Expenses
- Auto & Travel
- Car & Truck (Actual Expenses)
- New and enter in all information as prompted. Leave the vehicle cost as $0 if you do not need depreciation to calculate.
- Enter the Mileage and then you will be prompted to input the Actual Expenses
NOTE: If you do not want to take a depreciation expense on the vehicle, leave the Cost basis at $0.00. Part V of Form 4562 is required to be filled out if you are taking actual expenses.
To report actual expenses and depreciation for an asset on a Schedule E that has already been created (see here for instructions), from the Main Menu of the tax return (Form 1040) select:
- Income Menu
- Rents, Royalties, Entities, (Sch E, K-1, 4835, 8582)
- Rents and Royalties
- Expenses
- Depreciation
- Depreciation Module
- New or double-click the entry you wish to Edit
- Enter the Depreciation Data as prompted
- Select Listed Property
- Select the Type of Listed Property
- Enter the Mileage and then you will be prompted to input the Actual Expenses
To report actual expenses on a Schedule F that has already been created (see here for instructions), from the Main Menu of the tax return (Form 1040) select:
- Income Menu
- Farm Income (Sch F)
- Expenses
- Depreciation
- Depreciation Module
- New or double-click the entry you wish to Edit
- Enter the Depreciation Data
- In the Depreciation Data Entry Screen, select Listed Property, answering YES to confirm
- Select the Type of listed Property
- Enter the Mileage after which you will be prompted to input the Actual Expenses
Additional Information: