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Your name does not need to be on the title for you to claim business use of vehicle. You must claim actual expense though as @Opus 17 explains.
[edited | 1/21/2021 7:03am]
What if its a personal vehicle?
Yes, you have a personal vehicle used for business. You can claim the actual expense.
[edited | 1/21/2021 7:04am]
You can only use the standard mileage rate if you own or lease the car.
https://www.irs.gov/taxtopics/tc510
Ownership is generally determined by the title, as governed by the laws of your state. If you were given the car to use, you can't deduct the mileage. If you were given the car to own, you need to get it re-titled and re-registered and re-insured in your name.
The standard mileage rate includes allowances for depreciation and insurance. You probably can't insure the car in your name if you don't own it, and you can't claim depreciation for property you don't own. You can use the exact expense method, if you have records. This means keeping a record of all car expenses you pay for the entire year, and a record of al business mileage. Then you deduct a percentage of provable expenses equal to the percentage of business use. Don't include any expenses you didn't pay yourself.
If you were given the car to own, and have been delayed in getting a new title, claiming the standard mileage method is technically illegal until you get the car titled in your name. If you are audited, a kind examiner might give you leeway if you show you made reasonable efforts to title and insure the car in your name but were delayed for reasons beyond your control, such as the pandemic. But that presumes a kind examiner. It will definitely be a major audit risk.
@hope10123 wrote:
What if its a personal vehicle?
The purpose of either the standard mileage method or the exact expense method is to allocate the expenses of a personal vehicle to the business based on the amount of business use. But see my other answer on the allowability of the standard mileage rate method in your situation.
I didn't keep track of the gas I put in but I did keep track of the all the mileage when i was delivering and I have paperwork where I replaced one of the tires. So my question is what would I do for the actual expense method @Opus 17
I just looked and I do have bank statements where I've paid for gas with my card, not sure if that'll work though
It depends. You have the option to claim mileage or claim actual expenses. If you claim mileage, you have the option to claim it and would not record any information for actual expenses. You are not required to report actual expenses if you claim mileage.
My name isn't on the title or anything so I can't claim standard mileage
Yes, you are correct. According to this Turbo Tax article, you may claim actual expenses but not mileage because mileage factors in a depreciation equivalent only to be claimed if you own the car.
@hope10123 wrote:
I didn't keep track of the gas I put in but I did keep track of the all the mileage when i was delivering and I have paperwork where I replaced one of the tires. So my question is what would I do for the actual expense method @Opus 17
I just looked and I do have bank statements where I've paid for gas with my card, not sure if that'll work though
If audited, the IRS will want to see proof of how you determined your work-related expenses. Any expense you can't prove to the auditor's satisfaction may be denied. (All income is assumed to be taxable unless you prove otherwise.)
You need records of your car expenses for the year, and mileage records so you can determine the percentage of the car expenses that count as work expenses. The problem with relying on your credit card statement is that, without more proof, you could have fueled any car, or the expense could be candy and Red Bull. The IRS will usually accept a written log book, diary, spreadsheet program, phone app, or other record as being generally true, if there is evidence that you keep orderly records in a businesslike manner and that the record is made reasonably close in time to the expense. (In other words, using Quickbooks or Mint once a week is considered more reliable than trying to remember your expenses at the end of the month, and monthly is more reliable than trying to catch up at the end of the year.) If you are audited and seem to keep sloppy or incomplete records, they will give them less weight.
Ultimately, the risk is on you; most people are never audited, but if you are, you are responsible for proving your expenses to their satisfaction.
I am in the same position and looking for guidance I DoorDash however the car I use is in my dads name. I still send him money every month for the payment and insurance. I pay all the gas, maintenance, put tires on the car, pay the tags, etc. what can I claim on taxes?
No, in order to claim the standard deduction you must own the vehicle. If you do not own the vehicle, you can still take a deduction for your actual expenses.
What do those expenses include? For example, can I include gas, maintenance, tires, the money I send my father to use the vehicle?
Yes, you can take those expenses. The money you send to your father can be considered rent.
Actual vehicle expenses
If you decide to use the actual expenses method, additional auto-related expenses are deductible, such as,
You can't take depreciation, since you don't own the car.
Please see this LINK for more information.
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