Tax Deduction Question - Mileage to pick up a vehicle...

[XDCX]

I was bidding on a truck the other day and although I lost the auction I started to wonder about the IRS Tax Deduction for mileage.

I know the IRS allows business owners the option of using the standard deduction of 54 cent per mile so they don't have to calculate all of the individual expenses associated with driving a vehicle. (Depreciation, insurance, fuel, maintenance, etc.)

My question is, if a person rented a car for a one way trip to pick up a vehicle they purchased, could they use the standard deduction of 54 cents/mile or would they be limited to the actual expenses?

Does the fact the car was a rental make a difference or can you deduct mileage using the standard deduction if that method is easier or more favorable?

[XDCX]

Originally Posted by XDCX

My question is, if a person rented a car for a one way trip to pick up a vehicle they purchased, could they use the standard deduction of 54 cents/mile or would they be limited to the actual expenses?

I did some digging and everything I've read so far indicates that you can only deduct the actual expense associated with the rental car - NOT the standard mileage deduction.

The explanation was that since you don't own the vehicle you are not incurring the depreciation expense and the rental car company is taking the depreciation expense off of their taxes and the IRS doesn't want to get "double dipped."

I can't say I'm too surprised. For some reason the one way rental for a 600 mile trip I was looking at was really cheap - only about $65. I figured that fuel might be about $35 so the total expenses associated with renting a car would only amount to $100 but using the standard deduction would have allowed for a $300+ write off. It seemed to good to be true and I definitely don't want to anger the IRS...

[mryan55]

It makes sense. I'm kind of shocked at a $65 one-way rental! With most of the big chains they want to charge a per-mile rate or tack on a drop charge for a one-way rental.

If I'm nice enough the agency will sometimes waive the drop charge or some of the mileage, but not always.

[XDCX]

Originally Posted by mryan55

It makes sense. I'm kind of shocked at a $65 one-way rental! With most of the big chains they want to charge a per-mile rate or tack on a drop charge for a one-way rental.

If I'm nice enough the agency will sometimes waive the drop charge or some of the mileage, but not always.

I was surprised the one-way rental was that cheap too.

Ironically I didn't check the rate until after the auction was over - if I had checked the rate before the auction ended I would have increased my bids and might have bought the truck.

Concerning the rental rate, in the past I always went right to the Enterprise website and checked the one way rate. Most recently, however, I've been going to the Expedia website and checking the one way rate - in this case Avis ended up having the lowest rate.

I'm guessing that part of the reason the rate is so low is that business is slow in the Phoenix area when the weather is super hot and Avis might welcome the opportunity to move a car from the Phoenix area to central California where they'd have a better chance of renting it.