vehicle purchase for business

[atulagarwal_92128]

Hi, I followed the prompts under "Business Income and Expenses"-->vehicle to enter "actual expenses" and it asked prompted to enter the "purchase price" but it doesn't ask to deduct this purchase price. Is there an error in the TurboTax code or there's a different place for this vehicle purchase price deduction?

[ColeenD3]

You are asking about depreciation. Depreciation is an expense used in conjunction with actual expenses. If you elected to take standard miles, you can't take this deduction.

In the vehicle section, review your entries. If you chose miles, change it to actual expenses, and the various ways to take the depreciation will appear.

[atulagarwal_92128]

Hi, as I wrote in my question, the choice of "actual expenses" did not allow for purchase price deduction. Please help resolve this 

[PattiF · Accepted solution]

The purchase price is not deducted as an expense. An amount is deducted each year for depreciation on the vehicle over time.

Please read this TurboTax help article about the business use of vehicles for expenses and depreciation.

[Kaydouble07]

"In the vehicle section, review your entries. If you chose miles, change it to actual expenses, and the various ways to take the depreciation will appear."

If you have opted for miles in previous tax years, can change it to actual expenses another year?

[Carl]

as I wrote in my question, the choice of "actual expenses" did not allow for purchase price deduction. Please help resolve this 

There is nothing to resolve. Regardless of what you choose, the cost of the vehicle is depreciated over time. The purchase price of the vehicle is never "permanently" deducted as a business expense of any type. It is depreciated over time. Period.

On some vehicles and in some situations, the cost of the vehicle can be partially or fully depreciated in the first year. But depreciation is not a permanent deduction. When you sell or otherwise dispose of the vehicle, all depreciation is recaptured and taxed in the year of the vehicle's sale or disposition.

If you elect to take the "per-mile" deduction each year, then a percentage of the per-mile amount includes depreciation. Therefore, no depreciation will appear on the 4562 for the vehicle.

[jhermano872]

Hello - I have a similar issue. I purchased a used vehicle for business use. I entered the actual expenses and the software said it would cover "depreciation and other vehicle topics later" but later is only asked if an electric vehicle or other special type of vehicle was purchased and put into service not a normal gas vehicle unless I missed something. So when will Turbotax business ask me about the vehicle I purchased and put into service?

[KrisD15]

The vehicle should be entered by 

Updating the Business Income and Expenses

Edit the Business

Business Vehicle Expenses under Business Expenses

Initial you would select "Add a Vehicle" but if the vehicle was already entered, click Edit next to the vehicle listed 

Here you will enter actual expenses, mileage and then choose between the two for expensing.

If you choose Standard Mileage, you don't see the depreciation number, depreciation is built into the mileage. 

In 2022, you deduct 58.5 cents for every mile and of that, 26 cents is depreciation.

If you choose Actual Expenses, the program will compute the depreciation on the value of the vehicle. 

You will have Form 4562 in your tax file showing the depreciation. 

You need to keep track of depreciation for the time you sell or covert the vehicle to personal use.