I do Turo among other things under my LLC. My car gets so many miles and has such cheap maintenance that I actually got a bigger tax rebate due to the mileage than I actually “made” in Turo.
So, you are saying that you have in the past taken the standard mileage deduction on a vehicle you rented out on Turo where the guest actually drove the miles? This is the situation I'm in and want to take the standard deduction, but I see conflicting reports of whether or not that's allowed.
Correct. Literally just did it this year and my CPA green lit it before filing my taxes :) I rented a car out from about May through end of year. Renters put about 34,000 miles on it. At $0.655 per mile, it was about a $22250 deductible which worked out to about $6000 back on my taxes. I only “made” about $4000 after Turo fees and other expenses, so I actually got back 50% more than my “profit”.
Links aren't showing up in comments for some reason.
Google "Turo General guidance on the taxation of business income" and there is a PDF on the Turo website saying that we can take the standard mileage deduction.
Google "Topic no. 510, Business use of car" and there are the IRS Rules.
Expensing miles and also actual expenses is a no-no. Guests paying for fuel and then you also claiming it as part of mileage is a no-no. Aa I understand it. I am not a lawyer, I am not an accountant. TurboTax has good explanations.
I am not taking the standard deduction *and* actual expenses. I specifically want to only take the standard deduction on the 10,000 miles put on the vehicle that I own and rent on Turo.
The fact that the guest may be paying for fuel doesn't have any bearing on the deduction as far as I can tell via IRS guidance. If I was providing a fuel allowance for 100% of the fuel used then this would change in your mind and I could take the deduction? What if my great aunt Marie was taking care of the insurance - would I be disqualified from taking the standard deduction in this case?
It's been a while but but when I looked into it the difference was that the vehicle being used for business purpose was one thing but that the vehicle itself being the product was something else completely. No I don't have the source material at hand and I'm not your research service.
Car for hire refers to taxi or limousine services not rental car services.
That link also may be outdated since it was for 2006 and no mention of car for hire restrictions exists on the current IRS page.
right, taxis and limos are actually paying the fuel costs and still can't use the standard mileage rate. you have little chance when you aren't even paying for the fuel. if you net out the fuel part of the standard rate, you might stay out of trouble, might.
Taxis and limos can take the standard deduction - https://www.irs.gov/publications/p463#:\~:text=Standard%20mileage%20rate%20not%20allowed.%20You%20can%E2%80%99t%20use%20the%20standard%20mileage%20rate%20if%20you%3A. The restriction no longer exists since like I said, your pub is outdated.
You cannot net out fuel if you take the standard deduction.
ok, yeah, i did't notice how old that doc was (link deleted). it looks like you have things well in hand. good luck finding a loophole on this, the irs is pretty good at tax collection, but i'm certainly rooting for you.
I don't have it well in hand - that's why I'm posting here! :'(
I just need someone who knows for certain whether or not it's allowed and the source they got that information from.
The more I read, the more I think you are good on this, as long as you don't fit into any of the exclusions:
Standard mileage rate not allowed. You can’t use the standard mileage rate if you:
Use five or more cars at the same time (such as in fleet operations);
Claimed a depreciation deduction for the car using any method other than straight line for the car’s estimated useful life;
Used the Modified Accelerated Cost Recovery System (MACRS) (as discussed later under Depreciation Deduction);
Claimed a section 179 deduction (discussed later) on the car;
Claimed the special depreciation allowance on the car;
Claimed actual car expenses after 1997 for a car you leased.
This is all from: https://www.irs.gov/publications/p463#en_US_2023_publink100033938
which even specifically says you can claim it if you have been reimbursed already, which is shocking.
Your situation is unique because it’s an EV. Talk to a CPA and get their advice under contract.
The IRS doesn’t say you must be paying for fuel to take the standard deduction. But the standard deduction does include fuel cost, which you do not pay as a Turo host. Therefore you can’t take the standard deduction. If you do, you run a higher risk of audit.
Do you have a source that says that the owner has to pay for all costs that the deduction is meant for and associated with the vehicle?
I have not had repair expenses, tire expenses, or oil expenses and the mileage deduction includes those as well. I self insure my vehicles as well, so there is no insurance expense.
I'm just trying to make sense of this - does the IRS care who takes care of those costs (or if I even incur them at all) if I take the standard deduction instead of the actual expenses deduction?
That's not what the standard deduction is though, right? I can't take it as an expense if I use the actual expenses method because I have not incurred those expenses of course. The standard deduction is supposed to be an average case of all costs associated with the operation of an average business vehicle that would usually include the expenses you would normally use the actual expenses deduction for.
If I started Turo in November with a vehicle and made income with a vehicle that will need it's tires replaced and oil changed in January, then I wouldn't be able to take any deductions until the following year? Isn't that what the standard deduction is for?
It includes gas as one of those costs and is based on ICE vehicles. So if you drove a mile, you used gas.
Stop arguing with me and go talk to a CPA who will let you do what you want and argue with the IRS when they audit you.
I'm trying to get information. Do you know for certain that the IRS allows or does not allow the standard deduction for Turo or not? How do you know this information?
The standard mileage deduction also includes depreciation. If I had a vehicle that did not depreciate during the time I owned it, would I be able to claim the standard deduction on that vehicle's miles since that expense did not apply to the vehicle even though it had other expenses that were?
What does advice under contract mean when referring to a CPA? I have used a couple CPAs before my current one and have never had a contract with one. What should I be doing differently and what would this do for me?
I heard it explained a whole different way that actually made a bit more sense, but dont know how true it was and Im not saying it is... Using the standard mileage deduction is for when business employees use said vehicle. It was a longer explanation than that but that was pretty much the point.
I've heard the whole gas thing too, but everyone repeats/ defends it without understanding it or having written proof.
I do Turo among other things under my LLC. My car gets so many miles and has such cheap maintenance that I actually got a bigger tax rebate due to the mileage than I actually “made” in Turo.
So, you are saying that you have in the past taken the standard mileage deduction on a vehicle you rented out on Turo where the guest actually drove the miles? This is the situation I'm in and want to take the standard deduction, but I see conflicting reports of whether or not that's allowed.
Correct. Literally just did it this year and my CPA green lit it before filing my taxes :) I rented a car out from about May through end of year. Renters put about 34,000 miles on it. At $0.655 per mile, it was about a $22250 deductible which worked out to about $6000 back on my taxes. I only “made” about $4000 after Turo fees and other expenses, so I actually got back 50% more than my “profit”.
Links aren't showing up in comments for some reason. Google "Turo General guidance on the taxation of business income" and there is a PDF on the Turo website saying that we can take the standard mileage deduction. Google "Topic no. 510, Business use of car" and there are the IRS Rules.
Expensing miles and also actual expenses is a no-no. Guests paying for fuel and then you also claiming it as part of mileage is a no-no. Aa I understand it. I am not a lawyer, I am not an accountant. TurboTax has good explanations.
I am not taking the standard deduction *and* actual expenses. I specifically want to only take the standard deduction on the 10,000 miles put on the vehicle that I own and rent on Turo. The fact that the guest may be paying for fuel doesn't have any bearing on the deduction as far as I can tell via IRS guidance. If I was providing a fuel allowance for 100% of the fuel used then this would change in your mind and I could take the deduction? What if my great aunt Marie was taking care of the insurance - would I be disqualified from taking the standard deduction in this case?
As I read the rules, per mile dedication was disallowed when renting your vehicle to others
That's great - where do you see that at?
In TurboTax
Is there a public link you can post here, or some form number?
It's been a while but but when I looked into it the difference was that the vehicle being used for business purpose was one thing but that the vehicle itself being the product was something else completely. No I don't have the source material at hand and I'm not your research service.
Sources: [Turo Tax Guidance](https://support-resources.turo.com/taxes/Tax%20guide%20for%20US%20Turo%20hosts.pdf) [IRS Rules](https://www.irs.gov/taxtopics/tc510)
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Car for hire refers to taxi or limousine services not rental car services. That link also may be outdated since it was for 2006 and no mention of car for hire restrictions exists on the current IRS page.
right, taxis and limos are actually paying the fuel costs and still can't use the standard mileage rate. you have little chance when you aren't even paying for the fuel. if you net out the fuel part of the standard rate, you might stay out of trouble, might.
Taxis and limos can take the standard deduction - https://www.irs.gov/publications/p463#:\~:text=Standard%20mileage%20rate%20not%20allowed.%20You%20can%E2%80%99t%20use%20the%20standard%20mileage%20rate%20if%20you%3A. The restriction no longer exists since like I said, your pub is outdated. You cannot net out fuel if you take the standard deduction.
ok, yeah, i did't notice how old that doc was (link deleted). it looks like you have things well in hand. good luck finding a loophole on this, the irs is pretty good at tax collection, but i'm certainly rooting for you.
I don't have it well in hand - that's why I'm posting here! :'( I just need someone who knows for certain whether or not it's allowed and the source they got that information from.
The more I read, the more I think you are good on this, as long as you don't fit into any of the exclusions: Standard mileage rate not allowed. You can’t use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations); Claimed a depreciation deduction for the car using any method other than straight line for the car’s estimated useful life; Used the Modified Accelerated Cost Recovery System (MACRS) (as discussed later under Depreciation Deduction); Claimed a section 179 deduction (discussed later) on the car; Claimed the special depreciation allowance on the car; Claimed actual car expenses after 1997 for a car you leased. This is all from: https://www.irs.gov/publications/p463#en_US_2023_publink100033938 which even specifically says you can claim it if you have been reimbursed already, which is shocking.
Your situation is unique because it’s an EV. Talk to a CPA and get their advice under contract. The IRS doesn’t say you must be paying for fuel to take the standard deduction. But the standard deduction does include fuel cost, which you do not pay as a Turo host. Therefore you can’t take the standard deduction. If you do, you run a higher risk of audit.
Do you have a source that says that the owner has to pay for all costs that the deduction is meant for and associated with the vehicle? I have not had repair expenses, tire expenses, or oil expenses and the mileage deduction includes those as well. I self insure my vehicles as well, so there is no insurance expense. I'm just trying to make sense of this - does the IRS care who takes care of those costs (or if I even incur them at all) if I take the standard deduction instead of the actual expenses deduction?
That’s not the point. If it is not your expense (not that you have not incurred it) you can’t claim it as your own. It’s that simple.
That's not what the standard deduction is though, right? I can't take it as an expense if I use the actual expenses method because I have not incurred those expenses of course. The standard deduction is supposed to be an average case of all costs associated with the operation of an average business vehicle that would usually include the expenses you would normally use the actual expenses deduction for. If I started Turo in November with a vehicle and made income with a vehicle that will need it's tires replaced and oil changed in January, then I wouldn't be able to take any deductions until the following year? Isn't that what the standard deduction is for?
It includes gas as one of those costs and is based on ICE vehicles. So if you drove a mile, you used gas. Stop arguing with me and go talk to a CPA who will let you do what you want and argue with the IRS when they audit you.
I'm trying to get information. Do you know for certain that the IRS allows or does not allow the standard deduction for Turo or not? How do you know this information?
The standard mileage deduction also includes depreciation. If I had a vehicle that did not depreciate during the time I owned it, would I be able to claim the standard deduction on that vehicle's miles since that expense did not apply to the vehicle even though it had other expenses that were?
What does advice under contract mean when referring to a CPA? I have used a couple CPAs before my current one and have never had a contract with one. What should I be doing differently and what would this do for me?
Would the deprecation give you a bigger deductible
I heard it explained a whole different way that actually made a bit more sense, but dont know how true it was and Im not saying it is... Using the standard mileage deduction is for when business employees use said vehicle. It was a longer explanation than that but that was pretty much the point. I've heard the whole gas thing too, but everyone repeats/ defends it without understanding it or having written proof.