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Level 3
November 12, 2024
Question

Switching from Actual Expenses to Standard Mileage

  • November 12, 2024
  • 4 replies
  • 42 views

Client used standard mileage the 1st year and actual expenses for the next several years.
Now that the vehicle is fully depreciated, can i switch back to standard mileage to take advantage of the built in depreciation?

4 replies

abctax55
Level 15
November 12, 2024

What depreciation method has been used?

HumanKind... Be Both
Level 6
November 12, 2024

A new vehicle would have to be purchased to switch back to mileage.

Intuit Community Champion
November 12, 2024

Generally, the Modified Accelerated Cost Recovery System (MACRS) is the only depreciation method that can be used by car owners to depreciate any car placed in service after 1986. However, if you used the standard mileage rate in the year you place the car in service and change to the actual expense method in a later year and before your car is fully depreciated, you must use straight-line depreciation over the estimated remaining useful life of the car. There are limits on how much depreciation you can deduct. For additional information on the depreciation limits, please refer to Topic no. 704Publication 463 explains the depreciation limits and discusses special rules applicable to leased cars.

If you have fully depreciated the car you can only use expenses, but no further depreciation 

Level 15
November 12, 2024

Yes, you can switch back to the Standard Mileage Rate.  I am positive.

 

As a side note, I almost guarantee that the depreciation for Actual Expenses was done incorrectly.  I'm not aware of ANYBODY (including me) that does it correctly.  🤣

Intuit Community Champion
November 12, 2024

@TaxGuyBill are you positive you can switch to standard mileage if auto is fully deprecated. do you have a cite for that. Thanks 

George4Tacks
Level 15
November 12, 2024

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

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 the standard mileage rate or actual expenses.

I hope someone can track down IRC to go with this.

Answers are easy. Questions are hard!