Clarifying Ad Valorem Vehicle Registration Taxes can be deducted from Schedule C, if not deducting them in Schedule A because std deduction is higher than itemized A deductions

[ninjaryder1st]

Hello,

As the subject line indicates, I'm trying to clarify if Ad Valorem Vehicle Registration Fees/Tax can be deducted as a business expense on Schedule C - if not utilized on Schedule A because itemized deductions including Ad Valorem expenses were not used by taking the standard deduction.

Thanks! 

[DavidD66]

If the ad valorem tax was for a business vehicle then you should deduct them as a business expense on Schedule C.  A business expense will reduce your tax more than an itemized deduction.   

[ninjaryder1st]

Thank you DavidD66,

I'm having trouble informing the software that my vehicle is a personal vehicle with <50% business use rather than a vehicle purchased and used solely for a business - though I'm familiar with Schedule C standard vs itemized vehicle expenses, i seek clarification for Schedule C Vehicle Expense Deductions (Std vs Itemized) for vehicle with <50% business use.

1.  Should I add up the entire year's worth of vehicle mileage and expenses for gas, oil, tires, repairs, tolls/parking fees, ad valorem registration fees, etc.  and report the annual total to be used as the basis for applying the % business use calculated (ie:  business miles/total miles percent  x months of use / 12 )?   

Seems logical the % business use calculated is used to against the entire year expenses when determining the business use deduction for vehicle used < 50% - which may be greater than standard 0.67 / mile deduction for some. 

2.  Seeking to confirm I cannot take the 179 depreciation deduction as it is a personal vehicle used occasionally for business , is not > 50% business use, and doesn't meet criteria for 179.

3.  Can I depreciate a personal vehicle used for business with < 50% business use by using straight line MACRS  depreciation over say, 3, or 5 years as recommended for vehicles?    Or is the MACRS depreciation method meant strictly for vehicles owned/used by business (not a personal vehicle w/ <50% business use)?

I've been reading the IRS publications noting the math/calc is fairly easy, but the logic/explanation for how they derived the above concepts is not clear - noting the software doesn't do a great job explaining how (lacks prompts) business use is calculated,  when you can use it, or explaining what qualifies for 179 deduction and what doesn't - as if we're supposed to know when prompted to enter values/amounts.  

[DavidD66]

You cannot take a Section 179 Expense deduction.  When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. 

For how to determine the method and amount to deduct for the use of your personal vehicle for business, see IRS Topic 510 - Business Use of Car.  This short publications has answers to the rest of your questions.  If you want more details, see Publication 463, Travel, Entertainment, Gift, and Car Expenses

Business use is determined by the miles you drive.  If you drive 10,000 miles for business and 20,000 miles for personal use, your business use is 33.33%.  If you use the Actual Expense method, then under that scenario you could deduct 33.33% of all eligible automobile expenses.    

By far, the easiest method is the Standard Mileage method.

[ninjaryder1st]

Thank you again for the resources as I have looked through them noting "all eligible automobile expenses" is the mystery part.    I'm trying to connect the dots and discern if the listed expenses (w/ receipts), say gas for the entire year, is added, while applying the 33% business use rate to total expenses.   I didn't understand your calculation for 10k miles of 20 k miles is 33% rather than 50%. unless you meant to indicate 10k business miles out of 30k total miles for 33%.  

The publication examples indicated a bit more calculations to derive business use by dividing the months of business use by 12,  and multiplying that value by the ratio of business miles  / total miles expressed as a %. 

Example:  2 of 12 months used (2/12 = 0.166) and 10,000 of 20,000 miles (10/20 x 100 = 50% )   for a business use factor of 50% x 0.166 = 8% business use.   I'm uncertain how/where to place the 8% factor into software,  and if this 8% is utilized in calculating a deduction for say, $3,000 in annual expenses, with 92% attributed to personal expense.    Hopefully I'm making sense in trying to learn where the 8% goes into TT, and if I tally/receipt all expenses for the entire year.   

[AmyC]

1. Yes, 20k business miles  + 10k personal miles for a total of 30k miles in the example.

2. Yes, if you did not use the car for business the whole year, you would need to calculate the months of usage.

3. The computer figures out the percentage. Attached is the screenshot of the Car and Truck Expenses Worksheet. You will see boxes around the information you enter:

• Date placed in service - the program will do the math for the portion of the year
• Total miles driven
• Business miles
• Commuting miles

The program will then calculate personal miles and percent of business use

As for the gas, oil, and other expenses, you will enter the full amount and the program will figure out the deductible portion for you. Here is another screenshot showing you farther down the same worksheet Part III Actual Expenses shows where you entered your total of all gas, etc for the year. The program totals it all up and then takes the allowable percentage to determine your actual expenses.