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Gonzis
Level 2

Vehicle used for Food delivery but TT online asking for depreciation, market value, etc ?

I used my personal vehicle to do food delivery via Doordash.

In 2020 i did about a month of it using my personal vehicle and stopped. Still have the car.

After claiming standard mileage I get asked this question:

 

Q: When did John start using this vehicle for your work?

Answer: 01/01/2020

 

Next to the question there is a

Checkbox: John stopped using this vehicle in 2020 - If i mark it i get the following too.

Tell us when they sold, traded-in, gave away or stopped using this vehicle for your work.

 

If i mark the above check box and put in a date of sale, then in the next pages I get  questions: if i converted the vehicle to personal use,  depreciation and market value, sale, etc. If i leave it unmarked, those questions are gone.

 

The thing is I did stop using the car for Doordash and normally keeping it for my own personal use, but why am I being ask all these questions about depreciation etc?

 

I just want to take the standard deduction for mileage, so should i not check the box where it says i stopped using the vehicle in 2020 ?

 

Thank you so much again !

1 Best answer

Accepted Solutions
RayW7
Expert Alumni

Vehicle used for Food delivery but TT online asking for depreciation, market value, etc ?

If you still have the vehicle then do not check the box where it says I stopped using the vehicle.

 

The IRS offers two ways of calculating the cost of using your vehicle in your business: 1. The Actual Expenses method or 2. Standard Mileage method. Each method has its advantages and disadvantages, and they often produce vastly different results. Each year, you’ll want to calculate your expenses both ways and then choose the method that yields the larger deduction and greater tax benefit to you.

 

If you drive for a company such as Uber, the business use of your car is probably your largest business expense. Taking this tax deduction is one of the best ways to reduce your taxable income and your tax burden.

This is doubly important because you have to pay two separate taxes on your ridesharing income—once for your income tax and once for your self-employment tax (the amount you contribute as a self-employed individual to Social Security and Medicare). Both taxes are based on the net profit of your business, which can be reduced by taking a deduction for the use of your car for your business.

The IRS offers two ways of calculating the cost of using your vehicle in your business:

  1. The Actual Expenses method or
  2. Standard Mileage method

Each method has its advantages and disadvantages, and they often produce vastly different results. Actual Expenses might produce a larger tax deduction one year, and the Standard Mileage might produce a larger deduction the next.

If you want to use the standard mileage rate method, you must do so in the first year you use your car for business. In later years you can choose to switch back and forth between the methods from year to year without penalty. Each year, you’ll want to calculate your expenses both ways and then choose the method that yields the larger deduction and greater tax benefit to you.

View solution in original post

3 Replies
RayW7
Expert Alumni

Vehicle used for Food delivery but TT online asking for depreciation, market value, etc ?

If you still have the vehicle then do not check the box where it says I stopped using the vehicle.

 

The IRS offers two ways of calculating the cost of using your vehicle in your business: 1. The Actual Expenses method or 2. Standard Mileage method. Each method has its advantages and disadvantages, and they often produce vastly different results. Each year, you’ll want to calculate your expenses both ways and then choose the method that yields the larger deduction and greater tax benefit to you.

 

If you drive for a company such as Uber, the business use of your car is probably your largest business expense. Taking this tax deduction is one of the best ways to reduce your taxable income and your tax burden.

This is doubly important because you have to pay two separate taxes on your ridesharing income—once for your income tax and once for your self-employment tax (the amount you contribute as a self-employed individual to Social Security and Medicare). Both taxes are based on the net profit of your business, which can be reduced by taking a deduction for the use of your car for your business.

The IRS offers two ways of calculating the cost of using your vehicle in your business:

  1. The Actual Expenses method or
  2. Standard Mileage method

Each method has its advantages and disadvantages, and they often produce vastly different results. Actual Expenses might produce a larger tax deduction one year, and the Standard Mileage might produce a larger deduction the next.

If you want to use the standard mileage rate method, you must do so in the first year you use your car for business. In later years you can choose to switch back and forth between the methods from year to year without penalty. Each year, you’ll want to calculate your expenses both ways and then choose the method that yields the larger deduction and greater tax benefit to you.

Gonzis
Level 2

Vehicle used for Food delivery but TT online asking for depreciation, market value, etc ?

I'm using the standard mileage deduction and thank you for your response. Unchecking it doesn't ask for the rest of the situation,and I just wanted to have this resolved. Thank you.

DianeW777
Expert Alumni

Vehicle used for Food delivery but TT online asking for depreciation, market value, etc ?

Let's go through the steps because answers are important to determine if you are allowed to take the standard mileage rate.

  1. As stated, do not check the box beside, I stopped using this vehicle in 2020 > Continue
  2. Select I own this vehicle. or I lease this vehicle > Continue
  3. Answer the questions on the next screen about personal use > Continue > Answer questions about recordkeeping (must be yes to continue) > Continue
  4. Enter your business miles and your personal miles
  5. Answer No to four or more vehicles were not being used at the same time (if applicable, if yes, then the standard mileage rate will not apply) > /Continue
  6. Select  I'll take the standard mileage deduction of .....

Clearing cache and cookies on a regular basis is also very helpful.

 

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