Self Employed Question

[adavis123]

I work a full time job as a salaried employee. I started a car rental business this year and rent my vehicles on a platform call Turo. My questions are below.

1. I have a lot of expenses this year for the car rental business that dwarfs my revenue, can I use some of the loss to offset my taxes owed from my salaried position?

2. Do i have to create a diary of miles driven per car to use when i file my taxes?

[TeriH]

Congrats on the new business!

If you do have a net loss this year, it will flow through to your 1040 and reduce taxable income generated from other sources. 

Re deducting business miles, yes you should keep a log of business vs personal so the proper allocation of expenses can be made.  There are many apps available to help with that.

Best wishes, 
teri

[K M W]

Hi, adavis123! Welcome to the world of self employment!

The answer to your first question is yes, as a self-employed person, you can write off the expenses of your business against the business income.  If your business has a net loss, generally speaking yes, that loss will offset the other income on your tax return (note there can be exceptions to this, such as the at risk limitations or passive activity limitations).

You would report the business income on Schedule C of your tax return.  Any normal and reasonable business expenses can be used to reduce this income.  These include the fees that Turo charges you (you can find these on the Turo earnings and tax summary).  You can also deduct unreimbursed out-of-pocket expenses and your vehicle expenses.

When deducting vehicle expenses, you can choose to use either the Standard Mileage Rate or Actual Expenses.  In either case, you will need to keep a mileage log to substantiate the business miles driven and the deduction taken.  The IRS rules about taking vehicle deductions can be found in IRS Publication 463, Travel, Gift and Car Expenses, located at this link:  Publication 463 Page 26 of this publication has a sample Daily Business Mileage and Expense Log.  

With regard to any expenses, you should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence (i.e receipts) that, together with your record, will support each element of an expense.

[JandKit]

I agree with the foregoing answer and congrats on the success of your business!

You can certainly include in your return losses incurred in your business. It is also necessary to keep very good records that detail the type of expense incurred on each vehicle in your inventory! As well as any expenses incurred in keeping these vehicles in the proper condition for consumers to use.

Sounds very exciting and I wish you well!!
!