@Nipsey_X wrote:
So let me get this straight you can't use the business deduction and the standard mileage rate together? You can only pick one and I understand what you mean by picking the mileage rate more because the more miles the more I get back but wouldn't depreciating more then half the vehicles price on my taxes be more beneficial financially then 56 cents per mile?
You have the option to use (a) Actual Expenses or (b) the Standard Mileage Rate. Not both.
Using Section 179 (or the special depreciation allowance or regular depreciation) is part of Actual Expenses.
The Standard Mileage Rate has depreciation built-in to it. For 2021, that is 26 cents per mile. The remainder portion of the 56 cents per mile is based on the average cost for gas, repairs, insurance, etc., but in many circumstances a gas-conservative vehicle costs noticeably less than that (which means you would be receiving a 'extra' deduction versus your actual out-of-pocket cost).
Let's say you drive 25,000 miles per year for DoorDash (my brother-in-law drives over 70,000 miles a year for Uber). You mentioned the vehicle costing about $20,000. If you used the Actual Expenses, over 5 years you would have depreciated the vehicle cost of $20,000. If you used the Standard Mileage Rate, you would have depreciated $32,500 (26 cents multiplied by 25,000 miles a year, multiplied by 5 years). So in that scenario, you have benefited by receiving an "extra" $12,500 in deductions.
