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Old 04-07-2020, 09:21 PM
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Figuring car loan interest deduction for rideshare driver

This question pertains to our 2018 tax return. We got a car title loan on our car in the fall of 2017. In July 2018 we started using the car to drive for Uber and Lyft. It is my understanding that the portion of the car loan interest that corresponds to the mileage used for business is tax deductible on our Schedule C even if we take the standard mileage deduction. But do we start calculating the business use % beginning in January or in July when we started using the car for Uber/Lyft? Am I correct in assuming the business use % is based on miles and not time (days, hours, weeks, months)? But I still need to know whether to calculate the % of business miles beginning in January or July.

Another quick question, I signed up for Uber and Lyft and took my car in for their inspection in June but didn't start driving for them until July; what date do I put on the tax form where they ask when I put my car in service for this business: When I first signed up as a driver or the date of the vehicle inspection or when I first started earning money?

Many thanks for any help!



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Old 04-09-2020, 02:11 AM
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This question pertains to our 2018 tax return. We got a car title loan on our car in the fall of 2017. In July 2018 we started using the car to drive for Uber and Lyft. It is my understanding that the portion of the car loan interest that corresponds to the mileage used for business is tax deductible on our Schedule C even if we take the standard mileage deduction. ======>>>>correct.as you said, the interest on your biz related car loan is deductible even if you use the standard mileage rate. I mean , you can only deduct the amount attributable to your business use. For example, say, you paid $2k of interest on your biz related car loan and used the vehicle 70% for business use and 30% for personal use, you can deduct $71.4k on Sch C of 1040.in generl, You cannot deduct the actual car operating costs if you choose the standard mileage rate. The standard mileage rate already factors in costs like gas, taxes, and insurance.


>>
But do we start calculating the business use % beginning in January or in July when we started using the car for Uber/Lyft?=====>>> In July, ince as you said, in july 2018 you started using the car to drive for Uber and Lyft.


Am I correct in assuming the business use % is based on miles and not time (days, hours, weeks, months)? But I still need to know whether to calculate the % of business miles beginning in January or July.====>>assaid beginning in july.correct. To find the %of your car's use for business, you simply divide your total business miles by the total number of miles you drove for the year I mean business + personal.The IRS is very fussy about writing off the cost of your vehicle, so if you plan to take your biz related vehicle deduction, you need to keep a detailed log of your biz miles and other expenses if you want to write them off, too.

Another quick question, I signed up for Uber and Lyft and took my car in for their inspection in June but didn't start driving for them until July; what date do I put on the tax form where they ask when I put my car in service for this business: When I first signed up as a driver or the date of the vehicle inspection or when I first started earning money?====>>I guess the time when you signed up for Uber and Lyft.



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