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March 10, 2021
Question

I want to use actual expenses for the business use of my car but TurboTax tells me that since I used standard mileage the first year I can't switch. That's not true.

  • March 10, 2021
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The IRS doesn't allow you to switch to mileage expenses if you used actual expenses the first year but it's ok to switch to actual expenses if you used mileage expenses the first year.

1 reply

March 10, 2021

Yes, you can switch from using the standard mileage rate to actual expenses, with a limitation!  The limitation is that you cannot then use MACRS depreciation for the car, but instead can only use straight-line depreciation.  Please see the link below.

 

Choosing the standard mileage rate.

If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use either the standard mileage rate or actual expenses.

 

You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. You can’t revoke the choice.

 

In later years, you can switch from the standard mileage rate to the actual expenses method and if you do change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation, NOT MACRS.

 

IRS Publication Auto Expenses