Vehicle deduction is not calculating correctly

When you take the deduction for interest, you lose the deduction for standard mileage rate.  You can either claim the milage deduction or you can itemize the expenses for the vehicle which is the only way to claim the interest. 

To get your best result, take the standard mileage reate as it will give you a much higher deduction than taking the interest.

Portion of vehicle interest used for business is indeed a deduction you can claim in addition to the mileage rate. I just checked IRS guidelines again, Turbotax's guidelines, H&R Block's guidelines, and they all verify that. I've taken that deduction every year since I've had a car loan. I have since entered more precise information for my mileage (I made some corrections and vastly underestimated how many personal miles I drove), and it calculated my vehicle interest deduction at $303 (which would be correct - $913.90*(9036/27235)), and an additional $1149 for the mileage deduction - which obviously doesn't correspond to either 9036*57.5 cents or the other possibility I thought of - incorrect calculation of the mileage rate times the amount used for business. That also does not match up to what works out to 12.7 cents per each of 9036 miles. Clearly there is a bug.

And, to be clear, this is a Schedule C self employed business situation, not mileage accrued as an employee of any entity.

In TurboTax Online, when you are entering your vehicle mileage in the self-employed section, the program is not allowing standard mileage rate.  We are currently working on this issue. Please sign-up here and we will email you the latest updates.

It is not allowing the standard mileage rate right now.  It is giving you actual mileage which is showing depreciation and note interest only.  Leave the correct mileage in there and when it is fixed, go back through the entries then.  

As you can see, Parking Fees, Toll Fees, and Transportation fees are directly deductible, with property taxes and interest being based on the percentage used for business (33.18% in my case for 2020). However, you'll note that it shows I didn't enter anything for last year. That is obviously incorrect and should show what I entered last year, which was a slightly higher dollar amount (amortized loan).

You can see it shows the deduction only of the $303 (33.18% of $913.90), and no deduction for the mileage. Note that the "how was this calculated" shows the guidelines on what is supposed to happen. I just finally realized why there is more of a vehicle deduction than the $303 (or $542 I calculated before getting the precise information) - because I keep having to start over with the vehicle expense form every time (instead of it being preloaded with the existing information), it appears that it is iterating (compounding) the $542 or $303 every time I revisit it, which is CLEARLY a bug. That $1755 shown below is (rounded) $303 x 4 times I entered the correct info + $542 when I was using the estimated information. My only option until they fix this, NO MATTER WHAT THE TAX LAW IS, is to clear everything and start over. That will probably be enough for me to jump ship and go to H&R Block if someone can't get to work on this bug. I figure there will eventually be enough Lyft and Uber drivers filing their taxes that this will become a huge issue. I always do at least a loose assembly of my information to get a rough idea of whether I am getting any refunds. If not, I wait until just before April 15.

Technical is working on it. Since the IRS does not open until February 12, you may enjoy some light reading to help with your business, see  Sharing Economy Tax Center or catch some videos at IRS Video Portal.

What is happening is that Line 30 of the worksheet (Car and Truck) is picking up the wrong values.

Is the bug still not fixed? This is happening to me as well

Can you clarify if you're asking about vehicle deductions for Schedule C or Schedule A?

@gwencollins

For schedule C.

What issue are you experiencing generating a vehicle deduction on your Schedule C?

Are you claiming vehicle mileage deduction or actual costs?  Does the vehicle weight exceed 6,000 lbs?  Is the vehicle owned or leased?  Do you have a fleet of five or more vehicles?

They did eventually get it fixed last year, but I am guessing programming for 2021 taxes introduced it again. It wasn't that big of a deal except that I do a loose assembly right away every year to figure out if I am getting any refunds. I typically file right away if so. Otherwise I wait until April 15.

Actual Cost
Lease
Not 6000lb+
No fleet of 5 vehicles

I think the source of the problem is in Part V line 30 of the Car and Truck Expense Worksheet; get (20i - 20j times line 9). That formula needs to be looked at.


 

I have reviewed the form and the lease values are being multiplied by the the business percentage use correctly. The personal lease portion is not deductible. For answers to all business questions, see Small business

@VS10.

@AmyC 

The purpose of the Line 30 is to account for the inclusion amount to be subtracted from Line 29.

We should be simply multiplying line 20.i.4 (the inclusion amount) by line 9 (Percentage of Business Use). 

Instead on Line 30, what we are doing is subtracting the inclusion amount (20.i.4) from the rental fee (20.h.3), and then prorating it with the line 9 (business use percentage).

And THEN we are subtracting Line 30 (& 31) from Line 29 to get Line 32, which is then transferred over.

In effect we are adding the prorated inclusion account which is exactly the opposite of what needs to be done. Further we are removing the prorated lease payment portion from the deduction!

Correct Solution

Line 30 should be: Line 20.i.4 * Line 9. and not (Line 20.h.3 - Line 20.i.4) * Line 9.

When the interview happens it calculates it correctly. However the amount filled in the form is incorrect and that is what is transferred over to the return.



.

Thank you. I have gone back and looked at lines 20. My a-i is all actual expenses. Line j is blank. Line 21 takes the total of the expenses. Line 22 is line 21 times business use percentage. For mine, the same number is lines 24 & 27. Then additional expenses are add for the grand total on line 29. Then indeed, less the inclusion on line 31 which is reported separately, leaving the remains on line 32 for car and truck expenses. The line 32 amount going Sch C line 9 for car and truck expenses while the line 30 amount goes to Sch C line 20 for leased vehicles, etc.

You are saying that it is not going to your form correctly.  Can you review your Sch C and determine where the leased payments are going?

@AmyC 

Thank you so much for resolving this!

I went backed and confirmed what you observed. You are correct that the data is flowing through as you noted.

That the two amounts are going to different sections of Schedule C is where the confusion was coming from. 

I wish the worksheet explicitly said what you noted 

Enter line 30 amount to Sch C line 20 for leased vehicles, 
Enter line 32 amount to Sch C line 9 for car and truck expenses

Right now the line 32 of the worksheet is bolded and goes to Line 9 of Sch C, giving the impression it is under reporting the expense!