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Itemized Deductions Schedule-A


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Old 01-28-2011, 05:19 PM
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Standard Mileage Deduction / Actual Expense

I was told if I take the standard mileage deduction one year that I have to stay with it and cant switch to the actual expense. Problem I'm having is the standard mileage is putting my business net in the negative (-55) and I'm not qualifying for the earned income and child tax credit because of it. Supposed to be (+400). Last time it was benificial but I lost contracts and business income went down. Mileage still didn't change a whole lot because the lost contracts are in the same area as my current contracts.



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Old 01-29-2011, 01:25 PM
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“I was told if I take the standard mileage deduction one year that I have to stay with it and cant switch to the actual expense.”--->I don’t think so; if you’ve already started using the actual cost method for your business car,then you can’t switch to the standard mileage rate mid-stream for your tax deduction. Although if you started by using the standard cost method, you can switch to the actual cost method. You may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
“Problem I'm having is the standard mileage is putting my business net in the negative (-55) and I'm not qualifying for the earned income and child tax credit because of it.”----> As said above, you may change from standard mileage rate to actual vehicle expenses; I guess you need to adjust your business related vehicle expenses under actual method, too. The most important thing to consider in making the decision to use either actual vehicle expenses or standard mileage would be to take a look at the number of miles you drive each year. If you travel a large amount of miles, then the standard business mileage rate deduction is probably a better choice for you. The actual vehicle expenses deduction can yield a larger tax deduction, but is also more time consuming.



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Old 01-29-2011, 08:38 PM
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I'm not talking about switching from actual cost method to standard mileage. Im talking about switching from standard mileage to actual cost. I have always taken the standard mileage, but if I take the standard this year I will not qualify for EIC or the Child Tax Credit becuase it takes my net into the negative. Also the question was not whether I could switch form actual to standard mid stream(mid stream I assume during mid year). The question is whether I can use actual this year instead of standard and then go back to standard next year. Id like to know where the IRS says if take the actual one year that I can never take the Standard any following year.



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Old 01-29-2011, 09:01 PM
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"If you use the standard deduction the first year, you can switch to actual expenses. You have to be very careful because you can lose the ability to switch between standard and actual.
Per the IRS Publication 334"

Dont see where it says that above but I did find what its says this below.

"If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls.

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



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Old 01-30-2011, 07:39 AM
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"If you use the standard deduction the first year, you can switch to actual expenses. You have to be very careful because you can lose the ability to switch between standard and actual.
Per the IRS Publication 334"

Dont see where it says that above but I did find what its says this below.

"If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls."---> Agreed; you are correct.
PLease visit the IRS website here, Standard Mileage Rate on page #15; http://www.irs.gov/pub/irs-pdf/p463.pdf


Last edited by Wnhough : 01-30-2011 at 07:42 AM.


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Old 01-30-2011, 10:54 AM
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"If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business."

"In later years, you can choose to use either the standard mileage rate or actual expenses. "

I still dont see anywhere where it says I can loose my ability to swith back and forth.



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Old 02-08-2011, 03:46 PM
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Quote:
Originally Posted by MrJ71 View Post
I'm not talking about switching from actual cost method to standard mileage. Im talking about switching from standard mileage to actual cost. I have always taken the standard mileage, but if I take the standard this year I will not qualify for EIC or the Child Tax Credit becuase it takes my net into the negative. Also the question was not whether I could switch form actual to standard mid stream(mid stream I assume during mid year). The question is whether I can use actual this year instead of standard and then go back to standard next year. Id like to know where the IRS says if take the actual one year that I can never take the Standard any following year.
This is the same question I have. I am self employed and took the standard mileage expense the first year I put my vehicle in service. This year is the first year that actual expense method gives me a larger deduction. My question is if I switch this vehicle to actual expense method for 2010 will I be able to switch back to standard mileage in 2011 with this same vehicle? Thanks!



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