Standard mileage and depreciation

[JONI9611]

My client is truck driver. He bought his truck in 2014 for $140000.  I have to do his returns from 2014 to 2019. Can I use standard mileage for first couple years and then use actual expenses and depreciate the 140000 for later years?

[dkh · Accepted solution]

https://www.irs.gov/taxtopics/tc510

https://ttlc.intuit.com/community/business-expenses/help/can-i-switch-between-the-standard-mileage-r...

[IRonMaN]

No - for $140,000 I assume you are talking a "truck" truck vs a pickup truck.  You need to use actual expenses for those thingies.

[TaxGuyBill]

No.

I suspect you mean a semi-truck, which does not qualify for the Standard Mileage Rate at all.  And I suspect the cost of fuel would exceed that anyways, so it wouldn't be the best option.

Even if the vehicle did qualify, the election to use the Standard Mileage Rate in the first year must be on a timely filed tax return.  So late-filed tax returns can NOT make that election if it is the first year, and they would be required to use Actual Expenses.

[JONI9611]

Thank you.

[Strongsilence-CPA]

Even if the vehicle did qualify, the election to use the Standard Mileage Rate in the first year must be on a timely filed tax return

Do you know why this is required?  The first year sometimes can be a time when actual deductions are highest, primarily from the cost depreciation.

@TaxGuyBill 

[TaxGuyBill]

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@Strongsilence-CPA wrote:

Even if the vehicle did qualify, the election to use the Standard Mileage Rate in the first year must be on a timely filed tax return

Do you know why this is required?  The first year sometimes can be a time when actual deductions are highest, primarily from the cost depreciation.

@TaxGuyBill 

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Because the Regulation says so?  😂

Choosing the Standard Mileage Rate is an election, and there are many elections that required to be on an original, timely filed return.  I don't question the "why" of things.

[Strongsilence-CPA]

I might have made an error when I elected actual. In the first year, the TP bought a truck and received a large depreciation deduction but after that first year the mileage deductions are much more beneficial.  Not sure what I can do.

[TaxGuyBill]

If it was on a 2022 return you may still be able to fix it, but if it was on 2021 or earlier, I don't think you can do anything now.  It sounds like they are stuck with using Actual Expenses until they start using a different vehicle.