If I always used vehicle less than 50% do I need to recapture depreciation from standard miles deduction? If TurboTax asked me that and I say no, am I done?

[mntaxlady23800]

I have used my auto for small contracting business for less than 50% since 2012.  I am going to go back to 100% personal usage.  In turbo tax they ask if business usage fell below 50%. Since I have always been below 50%, do I need to recapture that depreciation and what line does it go on?  I don't see anything (questions on TurboTax step by step)  regarding this, but have seen it talked about in your community questions.

[DanO]

This is a requirement from the IRS that depreciation can be taken if the asset is used 50% or more for business.

Since this vehicle has never been used  at least 50% then the recapture will need to be done, and TurboTax will walk you through this.

• Sign into TurboTax Home & Business
• Click on Business tab then Continue
• Click on I'll choose what I work on
• Click on Business Income and Expenses Start/Update button
• Click on Edit your business
• Click on Business Assets Start button
• Click Yes on Any Large Purchases
• Go through 3 screens until Describe This Asset - Click on Intangibles, Other property and Continue
• Tell Us a Little More - click on Other asset type
• Continue going through interview and you will need to know how you depreciated the vehicle since 2012

Here is the recapture rule:

In certain cases, when the IRS allows you to take a large business deduction for a vehicle in a previous year, it wants some of that money back, if it looks like you are using the vehicle less and less for business.

This is called the recapture rule. The IRS is recapturing "excess" depreciation.

If you are sure that you drove this vehicle for business 50% or less this year, you will have to adjust your 2017 income to comply with this rule.

For example:
You bought a car for $20,000 in 2008 and deducted the accelerated depreciation amount of $15,510. Under straight-line depreciation, you would have been entitled to a deduction of $13,000 over the same period.

You must add the difference of $2510 ($15,510 - $13,000 = $2510) to this year's income.

Similarly, if you took a Section 179 depreciation deduction the year that you bought the vehicle and started your business, you will have to enter recapture income this year.

Follow the steps on the screen and we'll help you.

[mntaxlady23800]

When I was adding my miles for 2017 (on a different vehicle), Turbo Tax asked me if I stopped using my car for business, sold it or gifted it.  I said I stopped using it for business.  Then it asked me if this was the first time business usage went below 50%.  I said no.  It has always been below 50%.  Should I say yes?

I said no and then turbo tax said I was done and the car is not listed anymore.  The car I used in 2017 is the only one left.

I do not see a Business Assets button after I click on Edit your Business and there is no Large Purchases button at all.  I have never took depreciation for this vehicle. Thanks!

[DanO]

Okay, from your question, it sounded like you were trying to recapture depreciation. But, since you never took any there is nothing to recapture and it doesn't make any difference if you used your vehicle less than 50% for business.  You still get to take the standard mileage expense deduction.  You don't need to be in the asset/depreciation section at all, and you can delete that record.
You can go to the Business Vehicle Expense under Business Expenses and go through interview and see what your deduction is at the end. When you are adding your information about your vehicle you will see a box with the statement "I stopped using this vehicle in 2017." If you used your vehicle through the end of the year, then don't check it.

[Indieblue]

I know this is an old thread but I'm dealing with the exact same thing this year.  I've never used my vehicle more than 50% for business.  15%-20% on average for the year.  Last year I claimed mileage and it asked about my vehicle loan interest and dates I used the vehicle.  I entered all of that and done.  This year my business usage fell to 0% after March.  I entered the date I stopped using it, my mileage up until that point for business and my interest again.  Now it's telling me I need to go back to income and claim recapture of that depreciation.  I've never depreciated it more than the small amount they add to mileage.  Do I need to answer differently to avoid the recapture section?

[Pasha87]

@mntaxlady23800  I'm in a similar situation (had a personal vehicle that I always used less than 50% for business and only took standard mileage deduction, but closed my business at end of 2019 so converting vehicle to 100% personal use).  How did you end up handling your situation?