Video instructions and help with filling out and completing Fill Form 2220 Mileage

Instructions and Help about Fill Form 2220 Mileage

How do I take a tax deduction for driving my car how do I write off gas I spend on driving for myself employed or contract our business Amanda here from the business finance coach where I'm simplifying finances and helping you grow yourself employed work into a business welcome to the fifth video in this TurboTax entry series and in this video I'll be explaining the write-off while walking you through it in TurboTax all right so let's answer all of your questions about how you take a vehicle expense deduction for your self-employed business for taxes now we're on our summary page for everything for this business we'll scroll down and now we're gonna go into the business vehicle expense now I already started adding this vehicle and I'm going to go through it quickly with you and explain this deduction first there's some things to know about the vehicle expense deduction you cannot choose gas for certain trips and write that off instead of being able to choose certain expenses there's two methods for writing off your car expenses for either method you have to keep track of your miles that you drive and then there are two different options for calculating the amount of your vehicle write-off the first method is called the standard mileage rate method which is just taking something around 50 cents a mile it changes a little bit every year times your business miles and then that's the deduction the second method is the actual expense method as it sounds this involves all of your actual expenses for running your vehicle so you know just keep track of gas for your business trips you keep track of all of your gas all of your repairs all of your maintenance tires in the car everything to do with maintaining your vehicle the actual expense method can require keeping track of a lot more things and be a lot more tedious in either case you have to keep track of all your business miles for the actual expense method you have to keep track of all of your personal miles too because once you add up all of those actual expenses you get to take a percentage of those actual expenses okay so these questions we're gonna go through at first help you determine if you qualify and for which method of calculating your deduction you qualify for because like all things taxes there's a bunch of rules and the vehicle deduction much like the home office deduction is one of those things that's part personal so in reality there would be no deduction for it because it's personal but because there are lots of rules that give the self-employed more write-offs okay so I'm gonna click Edit and show you my Honda Ridgeline so they asked us about the vehicle and the date we started using the vehicle for business will continue so they want to know if we own our vehicle because if we don't own the vehicle we don't qualify to take any vehicle deduction if we lease the vehicle then some of the rules are a little different and I'll tell you about those later was this vehicle available for personal use in 2017 yes this film vehicle was available for personal use did you have another vehicle available for personal use yes I had another vehicle why are they asking these questions they should make sense so if your vehicles use 98% for business or let's say a hundred percent for business and you had no I didn't have another vehicle available for personal use that doesn't make sense and could certainly be a trigger did you document any of the work miles you drove for this business yes I document to my work miles again that wouldn't really make sense if I didn't document it because it's required now the IRS can ask to see your mileage log and a mileage log means that you keep track of every trip you take in your car and you can do this easily with apps the information you need about each trip is the date odometer readings starting and ending the purpose of the trip what was business-related about it and the the total distance of miles so these apps these days take care of all of this for you and you can go in and quickly just give a business purpose or mark your trips as personal that's a great way to keep track of your miles and I guarantee you you probably have more miles than you realize if you drive a lot for business how do you want to enter your mileage so now you get the choice you can enter your odometer readings or you can just enter your totals so I did 9,000 total miles and then 5,000 business miles and the total miles includes your business miles business miles involve driving for business purposes it doesn't include commuting commuting is driving from your home to your primary work environment that's not deductible okay continue how many vehicles did you use for your business zero to four now the software tells me you've got a standard deduction of two thousand six hundred and seventy five dollars now if I choose to go with the standard mileage deduction I'm almost done they took five thousand times fifty cents per mile or so and that's my deduction do you want to see if your actual expenses give you a bigger deduction yeah let's do it so you can see like that's pretty quick to enter if we're doing the standard mileage reduction if we do the actual method it's going to be a bit different so now we enter our total expenses for the entire year so gasoline four thousand oil seven hundred tires eight hundred repairs and maintenance vehicle inch registration license fees garage rent which you pay to park other expenses these are all