Sch C Standard Mileage expense confusion and eventual Sale of Vehicles

[CindyKR]

I have sporadically used a couple of personal vehicles over many years for a little bit of self-employed business use, charity work, and medical travel. I always used the standard mileage. I thought that by using standard mileage, I was avoiding having to keep track of any depreciation stuff.

My vehicles are very old and in bad shape. I bought one in 1991 new and the other in 2004 used. Many years ago, I closed one or two businesses that I used them sporadically in. I don't remember if I converted them to personal use on my taxes or not since the were already personal vehicles, I don't remember. I might be able to find the information in old tax records.

In 2019, I started doing some odd jobs and charged one customer for my mileage on part of what I did for them. I wasn't thinking about using mileage on my vehicle since I charged them, but once I started TurboTax, I was looking at that on my taxes. Since I was paid by the customer for the mileage and they reported that payment as income to me on a 1099-MISC, I entered that as income, but am not sure if I should use the Sch C deduction for mileage, too.

And, if I do count mileage as an expense, how do I decide when I put the vehicle in service since it has been used over the years only sporadically and I only used it in 2019 for my customer for about 2 weeks, which was actually about 41% of the vehicle's total use last year on a vehicle with over 313,000 miles on it.

And, if I do count the standard mileage as a Sch C expense, how would I record the eventual sale or disposal on both my personal and business side if I haven't reported a conversion to personal use for years after closing businesses or ending business use? I'm so confused since I just use my vehicles when needed, but that is not often.

I know I could increase my refund by about $274 for 2019 by counting the mileage. But, is it okay to do that if I was actually reimbursed by my customer (which was recorded as income on a 1099-MISC), and is it worth it if I have to keep track and later record basis and do something on my personal taxes? I will not make a profit on the eventual disposal or sale, obviously.

[ThomasM125]

You can deduct the business use of the vehicle if you use the standard mileage allowance. Since the reimbursement was reported on your 1099-MISC form, you need to deduct the cost of using the vehicle to avoid being taxed on income you didn't receive.

If you sell the vehicle, you will need to determine what the depreciation equivalent deduction is for it, which simply entails multiplying a rate by the number of miles you used to get your mileage deduction over the years. If the sale amount is nominal, you can choose to report the basis of the vehicle as zero, and treat the full sale as taxable, to save you some accounting work.

[CindyKR]

ThomasM125

Thanks for your reply and letting me know I should count the expense on my Schedule C.

In TurboTax, though, it asks for the date I put the vehicle in service and the date I took it out of service. Should I try to figure out when I first used it years ago? If so, what end date do I use?
Or should I just put the beginning and end dates that I used that vehicle for about 2 weeks last year?

[DaveF1006]

Just leave the vehicle in service without reporting a disposal. Just enter a start date that you started using it in 2019 for your handyman work.  This way, you can use it again this year if you decide to use it as your work truck in the same profession and wish to claim additional mileage.