Vehicle Expenses - Part Year

[Davejoseph84]

Hi, 

I worked as a teacher for the first half of this year. In June I started a business as a handyman. It is a sole proprietorship. I am planning to write off my actual expenses on my truck. I have kept track since June and have put 3772 miles on the truck out of which 1747 miles are business. I have to do breaks and a tune-up on the truck now, probably ending up in the 1000 range. I track mileage automatically in QuickBooks. 

46% of my miles since June are business miles. Does that mean that the business can pay 46% of the actual expenses on the vehicle? Or do I need to know how many miles I put on the truck between January and June before I started my business? I don't have exact numbers, but it would be approximately 1500 miles in that period if I need to count it. 

I will have approx. 1500 in vehicle repairs this year, approximately $4000 in gas expenses, and 800 in insurance expenses during the time since I started my business. So $6300 in total expenses x 0.46 = $2894 as business expense right? 

Help is appreciated!

Dave

[Critter]

Yes ... just enter the info in the program, follow all the screens to use the actual expenses method in the vehicle expenses section. 

[Davejoseph84]

Thanks. But do I need to take into account the mileage before I start my business or not?

[Carl]

Basically, the program will ask you what the mileage on the vehicle was on Jan 1 of the tax year, and on Dec 31 of the tax year. Then you'll enter how many of those miles were business miles, how many were personal miles, and how many were commuting miles.  That's it. Example:

Start of year mileage: 13,600
End of Year Mileage:  26,315

Business miles driven: 6,318
Commuting miles: 186

Personal miles:

Doing the math, you can see the total miles driven for the year is 12, 715. Of that, 6,318 are business miles., 186 are commuting miles, and the remaining 6,211 miles are personal use miles. Depending on what you select in the program, the program will do the math for you to figure your deduction.

Generally, if the vehicle was not 100% business use then you can't claim actual expenses. Besides, taking the "per mile" deduction is almost always better than the actual expenses anyway, unless you had to have thousands upon thousands of dollars of repairs done on the car during the time it was classified for business use.  So if you ad $5,000 of repairs done in April, but didn't start using the car in the business until June, then your repair costs just flat out do not figure into the business equation at all.  Though depending on "exactly" what those repairs were, it may add to the cost basis of the vehicle. (For example, replacing the engine and/or transmission would add to the cost basis.)