How can I enter payoff as vehicle expense?

[msgc7403]

I usually take mileage deduction but this year I paid off the vehicle.  I don't see where this expense, even if depreciable, can be entered.

[KrisD]

Mileage is an expense. It has nothing to do with the value of the vehicle.

Besides the mileage as an expense, the vehicle itself was valued and may be depreciated each year. (Although there is an option to take a 179 deduction the first year, allowing you to take a larger amount that year).

You can also expense the interest on the vehicle loan each year as that was paid.

The vehicle was entered as an asset when put into service, given a value, and depreciated.

The fact that you paid the loan off is irrelevant.

Depreciation and mileage is calculated the same, whether the vehicle is paid off or is financed.

Paying the vehicle off just shifted a liability (vehicle loan) and an asset (cash).

[msgc7403]

If entered as an asset when I first financed it, where am I redeeming a deduction each year for it's business cost?   The overwhelming cost of the asset was realized in 2016 but there's not accelerated depreciation or even an entry for this acquisition?

[KrisD]

What year did you add it as a business asset?

[KrisD]

"Prior depreciation on a vehicle used for business purposes is a function of the cost of the vehicle, the number of years the vehicle has been in service, and whether Sec. 179 or special depreciation allowances had been taken. Your best resource for prior year depreciation will be the Depreciation and Amortization Report printed with your copy of last year's tax return." TurboTaxMichaelMc, CPA

[msgc7403]

Purchased (financed) from a dealer on 10/16/2013.  paid 15k cash in 2016 to own the asset outright.

[KrisD]

So you should have added it as an asset in 2013 for whatever the purchase price was. In 2013 it either was 1) entirely depreciated by using the 179 deduction or 2) started a yearly depreciation schedule. The depreciation is based on the value of the asset, not what you owe on it. If you purchased for 20,000, that would be the value. It doesn't matter if you paid 20,000 or paid 1,000 and financed 19,000. Hopefully you reported the purchase price when you entered the asset (vehicle) not the cash-out-of-pocket only.

[msgc7403]

Thanks. I looked at the amort and dep. for 2013 and see the asset purchase price is entered and nothing for 179 except computers.   In 14 and 15 there is no report, just a mileage deduction.  As I understand it I'll just continue to take a mileage deduction as long as the vehicle is in business use because actual expenses will not likely exceed it.

[KrisD]

Right, you can use either, actual or mileage, but mileage is easier and changing to actual can affect the way the vehicle is depreciated. If you need major work, like a new engine, you can add that as a new asset and depreciate that as well (AND still expense the mileage). Thank you for using TurboTax.