Section 179 vs. Standard Mileage Deduction

[jgthx]

Hello everyone,

I have a question about deductions for my business car.

I do food and package delivery full time so I purchased a 2016 Prius right at the beginning of January 2021.

I paid about $15,000 for the vehicle and it's fully paid off now. I plan on keeping the car for many years.

Money was good last year because of Covid and I also received some relief grant money so my 2021 income is probably higher than my .

My business miles for the year were 14,373. Commuting miles were 4,213. Personal miles were 1,945. I expect these mileage numbers to be relatively consistent for the next few years.

I'd appreciate advice on if I'd benefit more from doing a Section 179 deduction for 2021 and then actual expense deductions or taking just the standard mileage deduction every year.

[Mike9241]

do you get a w-2 (you're an employee)  or are you self-employed? if you are an employee none of that mileage nor any of the costs of the car are deductible.

if you are self-employed, then about 70%  (approx 14K business mileage to about 20K total mileage)of the car cost could be deducted in 2021. nothing more in the future and you may need to make  and adjustment in a future year if the car is disposed of before July of 2026.  in addition 70% of your other car expenses would be deductible - gas, oil insurance.

you option either actual expenses which includes section 179 or standard mileage.

if you use actual expenses in any year including the first you can not switch to standard mileage in future years.

what's better? we have no way of knowing. if your income goes up in future years taking the depreciation over the tax life might save you more money than taking the max depreciation the first year.

[jgthx]

Hi thanks for your reply. I am an independent contractor, not an employee.  

I believe that my 2021 income will be higher than it will be for the next 2-3 years. So does that mean that taking the Section 179 this year and then doing actual costs in future years will probably serve me better?