The Vehicle Worksheet, also known as the Car & Truck Worksheet, is designed as a convenient place to enter information about a vehicle that you started using in business after 1980.
Based on the information you enter on this form, we'll calculate the actual expenses (including depreciation) or standard mileage for vehicles you started using after 1980.
We provide this worksheet in an effort to simplify the process of accounting for the use of a vehicle in business, and we hope that it works well for you. This area of the law is complicated, but we think we have succeeded in simplifying the calculations and the entry of information for you.
In brief, this form serves a number of functions. It:
Gathers your vehicle expenses in one place.
Helps you decide (if you have the flexibility to choose) whether to claim the actual expenses method (including depreciation) or the standard mileage method.
Calculates your depreciation.
Calculates your standard mileage.
Asks you the "information only" questions posed on various IRS forms.
What follows are some explanations about the operation of the Vehicle Worksheet. The explanations track the sections of the Vehicle Worksheet itself.
If you're using the Vehicle Worksheet for a leased vehicle, you should complete ONLY Parts 1, 2, 3, 6, 8, and 9. You should not complete any other parts of the Vehicle Worksheet.
You will need to complete this section for any vehicle about which you're entering information.
When you enter the number and copy of the tax form on lines 1b and 1c, we display the name of the relevant activity on line 1d. That helps you make sure you have indicated the correct form and copy number. For some forms, we use the activity that appears on the form you indicate; for those forms or schedules without such information, we display the name of the form on line 1d.
We calculate line 2c based on the date placed in service from line 2a and the month sold, if any, from line 000.
Most people will enter on line 2d the full number of months they owned or leased the vehicle this year. Only those people who converted their vehicle from personal use to business use (or vice versa) will enter an amount here other than the full number of months they owned or leased the vehicle this year.
For the number of months of business use this year (i.e., for the time described on line 2d), we ask you to enter a number of mileage figures on lines 2f, 2g, and 2h. We sum these mileage figures on line 2i .
Many of the pieces of information that we ask you to enter in the first parts of the form are used to calculate the business percent on line 2k .
Here is how we calculate the business percentage on line 2k. We start with the number of months you used the vehicle for business (i.e., at least partly for business) in 2010 (from line 2d).
If the number of months you used the car exclusively for personal use (from line 2e) is zero, then we calculate the business percentage simply as the number of business miles (from line 2f) divided by the total miles driven in 2010 (from line 2i). The idea is that, if all the months you used the car in 2010 are for business use, we can figure your business percentage by just looking at the number of business miles and the number of total miles.
If the number of months you used the car exclusively for personal use is greater than zero, then the calculation of business percent is a little more complicated. In that case, we calculate your business percentage on line 2k as the product of two ratios:
the business mileage on line 2f divided by the total mileage on line 2i, times
the number of months on line 2d divided by the number of months on line 2c.
Note: If line 2d is blank (i.e., you did not use the vehicle for business during any month of 2010), we don't generate a business percentage on line 2k. If we're calculating a business percentage of "0.00" and you think we're mistaken, please take a moment to make sure that you have entered a number of months on line 2d.
If you look at the expense chart in Part 3, you will see that columns a and c are user-entered and that column b is calculated. All are blank at first. If you enter an amount in column c, nothing will happen to columns a and b. If you enter an amount in column a, the business percentage from line 2k will appear in column b, and column c will become calculated as the product of columns a and b.
To see how the Expense Chart works, let's take automobile insurance on line 3a as an example. If the total amount of your automobile insurance is $1,000 and your business percentage on line 2k is 75%, you should enter the full $1,000 in column a of line 3a. We'll then calculate $750 ($1,000 x 75%) as the deductible amount in column c of line 3a.
Note: If you would rather enter directly the actual deductible amount for this item (instead of having us calculate it for you), you will need to leave column a blank and enter the actual deductible amount in column c, not column a, of the Expense Chart.
Expenses for tolls and hourly parking on line 3m are separated from the rest of the Expense Chart because the tax code treats them differently from the total amount on line 3l. For example, expenses for tolls and hourly parking on business trips carry to a separate line on Form 2106 (or Form 2106-EZ).
On line 4a, we ask you to enter the original cost of the vehicle (including sales tax and basis of trade-in). Often, the amount you should enter here will be what you paid for the vehicle. However, if you first use the vehicle exclusively for personal use and later place it in service for business, you should enter on line 4a the basis of the vehicle on the date you placed it in service for business. (The basis is the lesser of the car's fair market value or its adjusted basis on that date.)
The amount we put on line 5n is the maximum allowable section 179 amount, which for passenger automobiles is equal to the luxury car limit for 2010 times the business percent. Note that the "business percent" that we use in this calculation is the business mileage on line 2f divided by the total mileage on line 2i. For the calculation of the maximum allowable section 179 amount, we don't take into account the number of months that you used the car for business or personal use in 2010.
Note that the luxury car limit is higher for certain clean-fuel and electric vehicles placed in service after August 5, 1997. If you placed a clean-fuel or electric vehicle in service after August 5, 1997, you should read the IRS instructions for Form 4562 and, if necessary, override portions of our Vehicle Worksheet.
On line 5o, we calculate the depreciable basis as the original basis (from line 4a) times the "business percent" minus the section 179 amount claimed (from line 5n or 5m) and minus any bonus depreciation. As in the case of the maximum allowable section 179 amount (see line 5n), the "business percent" that we use in the calculation of depreciable basis on line 5o is the business mileage on line 2f divided by the total mileage on line 2i.
The "luxury car" limit established by the IRS for 2010 appears on line 5w.
On line 5x, we reduce the "luxury car" limit established by the IRS by the "business percent," which is calculated in this case as the business mileage on line 2f divided by the total mileage on line 2i.
In the calculations of the depreciation amount on line 5bb, there is one special case for which we multiply the depreciation amount we normally would have reached by the months used for business (see line 2d) divided by 12. Here is the special case:
The year in service is not 2010 (see line 2a).
The vehicle was not sold in 2010 (see line 2b).
The number of exclusively personal months on line 2e is greater than zero.
This section calculates what your standard mileage is (or would be).
We calculate the amount on line 6c as the amount of tolls and hourly parking (from line 3m) plus the amount of deductible monthly parking (from line 3b, column c). If you're self-employed (i.e., you're directing this Vehicle Worksheet to a Schedule C, Schedule C-EZ, or Schedule F), then we also include on line 6c the deductible amount of your interest (from line 3c) and taxes (from line 3f).
Line 6d is the sum of lines 6b and 6c.
This part of the Vehicle Worksheet provides a comparison of standard mileage to straight line depreciation with expenses.
We calculate the amount on line 7d as the sum of the amounts on lines 7c and 3n.
For those who are eligible for standard mileage, this part provides a comparison of standard mileage to actual expenses (including, for vehicle owners, regular depreciation).
Here is how we arrive at the standard mileage amount on line 8a :
If the number of months you used the vehicle this year is greater than zero (see line 2c), we take the amount on line 6d and multiply it by "12 / Months Owned (or Leased) This Year (from line 2c)." (We assume that, if you used the vehicle for 6 months this year and drove 5,000 miles for business, you will drive 10,000 miles for business during those years in which you use the vehicle for business for a full 12 months.)
Once we have the amount calculated in step #1, we multiply it by the number of years on line 8a minus "1."
Once we have the amount calculated in step #2, we add it to the amount on line 6d .
The amount that results from the first three steps goes on line 8a as the standard mileage amount.
Here is how we arrive at the residual basis amount (for standard mileage) on line 8a:
We subtract from the basis shown on line 4a this year's "reduction in basis" amount (23 cents) times the number of business miles on line 2f.
Then, we take into account the remaining years' amounts after assuming that a person who uses a vehicle for 6 months this year and drives 5,000 miles for business will drive 10,000 miles for business during those years in which he/she uses the vehicle for business for a full 12 months.
Your responses to these questions don't affect the calculation. We ask them in order to help complete your tax forms.
If this activity is passive, line 10d carries to the Alternative Minimum Tax (AMT) Passive Activities Worksheet on Schedule C, Schedule F, the Rentals and Royalties Worksheet, or Form 4835. From the relevant AMT Passive Activities Worksheet, amounts flow to Form 6251, line 11.
If this activity is non-passive, line 10d carries directly to Form 6251, line 8 or 14d, as appropriate.
The amounts that appear on lines 11a, 11b, 11c, and 11d depend on whether the vehicle was placed in service this year and whether standard mileage was elected. What follows are five scenarios (a, b, c, d, and e). Please find the scenario that describes your situation and then look to see how we calculate lines 11a, 11b, 11c, and 11d for your scenario.
A. Vehicle placed in service this year; standard mileage on line 8c not indicated
Line 11a: The depreciation allowable this year on line 11a is the sum of lines 5bb, 5n, and 5n.
Line 11b: The standard mileage allowable this year on line 11b is zero.
Line 11c: The other deductible expenses amount on line 11c comes from line 3n.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d comes from 10d.
B. Vehicle placed in service this year; standard mileage on line 8c indicated
Line 11a: The depreciation allowable this year on line 11a is zero.
Line 11b: The standard mileage allowable this year on line 11b comes from line 6b.
Line 11c: The other deductible expenses amount on line 11c is the difference between line 6d and line 6b.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d is zero.
C. Vehicle placed in service before this year; standard mileage used in first year (see line 4b); standard mileage on line 7g indicated [owned vehicle]
Line 11a: The depreciation allowable this year on line 11a is zero.
Line 11b: The standard mileage allowable this year on line 11b comes from line 6b.
Line 11c: The other deductible expenses amount on line 11c is the difference between line 6d and line 6b.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d is zero.
D. Vehicle placed in service before this year; standard mileage used in first year (see line 4b); standard mileage on line 7g not indicated [owned vehicle]
Line 11a: The depreciation allowable this year on line 11a comes from line 7c.
Line 11b: The standard mileage allowable this year on line 11b is zero.
Line 11c: The other deductible expenses amount on line 11c comes from line 3n.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d is zero.
E. Vehicle placed in service before this year; standard mileage not used in first year (see line 4b) [owned vehicle]
Line 11a: The depreciation allowable this year on line 11a comes from line 5bb.
Line 11b: The standard mileage allowable this year on line 11b is zero.
Line 11c: The other deductible expenses amount on line 11c comes from line 3n.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d comes from line 10d.
F. Leased vehicle placed in service before this year; standard mileage used previously (see line 1e1)
Line 11a: The depreciation allowable this year on line 11a is zero.
Line 11b: The standard mileage allowable this year on line 11b comes from line 6b.
Line 11c: The other deductible expenses amount on line 11c is the difference between line 6d and line 6b.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d is zero.
G. Leased vehicle placed in service before this year; standard mileage not used previously (see line 1e1 )
Line 11a: The depreciation allowable this year on line 11a is zero.
Line 11b: The standard mileage allowable this year on line 11b is zero.
Line 11c: The other deductible expenses amount on line 11c comes from line 3n.
Line 11d: The Alternative Minimum Tax adjustment this year on line 11d is zero.