Straightline depreciation

[Stuohn101]

So I bought my new 2019 truck for my W-2 job in 10/2019 and my company gave me a truck allowance each month to cover the cost of use (barely), I left that W-2 job in 09/23 and started another W-2 job 09/23 until 09/24 also with a vehicle allowance. In Dec 2023 I started a side business 1099 to be an Instructor and have been using same truck to travel from W-2 job to various "training locations" throughout Texas. I have good records of business miles (from W-2 job to 1099 job and between 1099 locations) and estimated my total use for 2024 is 25% business use of a total 9000 miles. My truck cost me 60,000 over life of loan (just paid it off this year). I'm estimating the "scrap value" is @ 15,000.

How should I calculate the depreciation? 60,000 and depreciate over the 5 years (2024 would be last year) even if I did not claim previous years? Or do I have to start 2024? 

[Opus 17 · Accepted solution]

Under the tax law since 2018, you can't deduct vehicle expenses for a personally owned vehicle used for work if you are a W-2 worker.  Your employer can't give you a tax-free truck allowance.  They can either,

a. require you to prove your mileage and expenses and reimburse you tax-free for your proved expenses, or

b. they include the truck allowance in your taxable wages, reported on your W-2, and subject to tax withholding, social security and medicare taxes. 

As such, there is no depreciation that you claimed or could have claimed for using the truck in your W-2 job, and you don't have to adjust your cost basis.

For the 1099 side job, you either claimed or could have claimed depreciation as a business expense.  If you used the standard mileage rate, you claimed that on line 9 of schedule C.  Part of the standard mileage rate includes depreciation, the amount is shown in publication 463. 

https://www.irs.gov/publications/p463#en_US_2023_publink100034059

If you claimed actual car expenses, your depreciation was included on line 13 of schedule C.

You need to adjust your basis by the actual depreciation you claimed or could have claimed from the side job.  Ignore the W-2 job because you were not entitled to depreciation for that job.