Turo Car Share

[Kotor]

I have a small amount of income from the Turo car share platform. Note that it is like AirBnB for cars, not a gig platform like Uber / Lyft.  It was not enough income to qualify for a 1099-K partnership statement.  I plan to report as Schedule C self-employment income.  Since the vehicle is my primary depreciable asset in this "business", would you recommend I take the standard milage deduction using miles driven by guests, or the actual expenses method?

Thanks!

[Vanessa A]

There is not a general "best answer" to this question.

There are several factors to consider with this.  

1) Was this your first year doing Turo?  

2) How old is the car and how much did you pay for it?  If it is a new car and you want to deduct the full amount this year, you could lower your profit and offset other income, but would it be better to lower your profit in future years instead?  

3) How many years do you plan to do Turo?

Basically, the things to consider are

1. If you use the actual expenses and depreciation in the first year, you cannot switch back and forth.  You will not be able to claim the standard mileage deduction in any future years.
2. If you use the standard mileage in the first year, you can switch back and forth, but you cannot claim any special depreciation or bonus depreciation in future years.
3. If you do not use this vehicle exclusively for Turo, then you would need to prorate depreciation and actual expenses.  Where as if you use the standard mileage, you would only need to enter the miles you used it for business (well the customers used it for business)

You can check both ways in TurboTax to see which one you make out with best this year. You will want to consider what your future situation will look like as well when determining which one to do this year. 

[Kotor]

Thanks!  After doing some research, I feel that "actual expenses" might be a more defensible method as claiming the milage deduction when I do not pay for gas doesn't make much sense to me.  I can still claim certain expenses like oil changes, tires, etc. It appears that those expenses are then automatically prorated by the software by the % of miles "driven for business".

The vehicle in question is a used vehicle and "entered service" (was first listed on platform) in 2024. It seems that the most advantageous deduction in this case is the bonus depreciation in the first year. Apart from not being able to shift back to milage deduction (which is fine), are there any other concerns about taking that deduction in this case?

[Vanessa A]

No.  Taking actual expenses does not have a down side other than not being able to switch back and forth as some years one works out better than the other.  But for the first year, the bonus depreciation can be worth more now than the concern for being able to use mileage in the future.