Turbotax reporting only 2/3 business use on vehicle when it is 100%

[Bpex]

If i change the date placed in service to the 1st of the year, it changes to 100%. As you can see, line 6 divided by 5c should be 1 or 100%. This 66.67% brings down my expenses applicable to business and raises my taxes owed, even though they are 100% applicable to the business.

[DianeW777]

My suggestion is to make the date acquired the same as the placed in service date since all of the miles are business.  Since this provides the correct business use percentage it's an accurate reflection on your tax return.  Keep your records with your tax file, and proceed with your return.  If necessary use the first of the year as you indicated for the correct actual results.

[Bpex]

The only way to get it to say 100% business use is by saying the date placed in service was 1/1/22. The problem with that is I now also get the full year's depreciation of $1000 instead of the correct $667. Not sure which to do, but it seems the best for me would be taking the full year depreciation and not loosing out on the 100% expenses paid. Will this cause any problems though?

[HopeS]

The IRS considers a semi-truck to be a qualified non-personal-use vehicle. As a truck driver, you must claim your actual expenses for vehicles of this type. So, you can’t use the standard mileage method.

To deduct actual expenses for the truck, your expenses can include (but aren’t limited to):

• Fuel
• Oil
• Repairs
• Tires
• Washing
• Insurance
• Any other legitimate business expense

If your truck does not match the description of a semi-truck then the above does not apply.

@Bpex 

[Bpex]

Thank you,

It's a small box truck, 2 axles, 6 wheels. Light Weight 5765 lbs/14050 GVWR. I read in another answer to use the GVWR when answering the weight of the vehicle, which makes it seem larger than it is. Is this correct, and would it count as a semi? (I am doing actual cost either way so probably doesn't matter?)

My original question that you replied to wasn't answered though.

[DianeW777]

No it will not cause problems because according to you the truck is 100% business use.  That is what you are trying to accomplish with your expenses.

Since you are using actual expenses and if you answered the weight questions properly it doesn't matter because you are using actual expenses.

@Bpex 

[Bpex]

Ok, thank you. Also the full year of depreciation is ok even if I got it a little later? In fixing the 100% issue, I also get 100% depreciation for the year vs the 2/3.

[DianeW777]

Yes.  We have in the tax law a method called the 'Half Year Convention', under the general depreciation system (GDS).  When any asset is placed in service you receive a depreciation amount for half the year the first and last year placed in service and a full year in the 4 years in between. 

• Exceptions: 
  1. If property is placed in service in the last quarter of the year then a Mid-Quarter Convention could be used (does not apply to you)
  2. If the property is required to use the alternative depreciation system (ADS), the depreciation is not accelerated but uses the same conventions.  This happens when there is less than 51% business use.

This information applies to the actual expense method for vehicles; and for other types of assets.  IRS Publication 946

@Bpex 

[Bpex]

It was giving me 2/3 year depreciation, and now changing the "placed in service" date to the first of the year it is giving me the full year. That is 1/5 of the total cost of the truck. You are saying that I should only be getting half a years worth?

[DianeW777]

Yes, always in the first year a vehicle is placed in service.  The rate for the first year is 20%, second year is 32%, etc. times the business use percentage of the cost of the vehicle  (see the chart below and in IRS Publication 946). In your scenario the vehicle is 100% business so the full cost would be used for depreciation.  

[Bpex]

Then I would say that "yes", it's ok that I am getting the full year's 20% worth of depreciation. Even though I in fact purchased and put it into use around 05/01/2022? Because I have to enter 01/01/2022 to make it say that I used it 100% for business and not lose out on deductions for other costs associated with it.

[RobertB4444]

Yes, that's ok.

@Bpex