Today TaxMama® hears from Walter in the TaxQuips Forum with a most astute question. “Is there a limit to how many miles of standard mileage auto/truck expense a self-employed taxpayer can take on their Schedule C for a given year? The portion of the business standard mileage rate treated as depreciation is on average about .21 – .23 per mile. So if a self-employed individual drives his/her vehicle about 30,000 miles a year for 5 years they would have taken approximately $30,000 – $35,000 in equivalent depreciation expense. How does one account for taking continuing standard mileage rate for a vehicle that has had excess business mileage taken in prior years?”
That’s one of the most insightful questions ever. And it’s one that tax professionals themselves rarely ever ask. Well done.
Rita Lewis our Enrolled Agent at https://DollarsSense.com in Connecticut provides the answer.
The depreciation component of the Standard Mileage Rate is used only for purposes of calculating gain or loss if the vehicle is sold, or calculating depreciation when switching from the standard mileage rate (SMR) to the actual expense method. So, it does not prevent the taxpayer from continuing to use the full business SMR to figure a deduction even after the car is considered fully depreciated. (These notes came from The Tax Book.)
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