Actual Auto Expenses

Number Cruncher, CPA is a sole proprietor accountant who loves keeping up on the latest IRS rulings. Number Cruncher realized he could deduct a substantial portion of the cost of his new vehicle by taking a section 179 Deduction. When tax time rolled around, he was required to use the actual method to deduct his business vehicle expenses because he chose to take the Section 179 deduction.

When a serious Airbnb host told her accountant she wanted to deduct her Airbnb vehicle expenses, her accountant was skeptical. That is until she sent him her Hurdlr mileage and vehicle expense reports, which substantiated that she drove almost 2,000 miles (5% of her total miles) for her Airbnb activities last year and spent $10,000 operating her vehicle. Because she had the right supporting data, she was able to deduct $500 ($10,000 X 5%) of actual vehicle expenses on line 6 of her Schedule E.

Luke has always been an entrepreneur so purchasing a fleet of eight vehicles to “lease” to uber drivers was a no brainer. To maximize his profits, Luke makes sure to always have six vehicles on the road at any given time. Because he operates more than five vehicles at the same time, he is required to calculate his businesses vehicle expenses based on actual costs.

Rachel is a solo-photographer who is typically either at home, on location at a shoot, or editing her photos at a coworking space she has a dedicated desk at. If Rachel drives from her home or her office directly to a shoot she would be able to consider those as business miles. On the other hand, if Rachel drives from her home to her co-working space to edit some photos those miles would be off the table. At the end of the year Rachel will tally up all of her qualifying business miles and deduct the portion of her actual auto expenses related to those miles.