Car and Truck Expenses: There are two methods you can use to deduct your vehicles expenses, Standard Mileage Rate or Actual Car Expenses. You may only use one method per vehicle.
- To use the Standard Mileage Rate, go to the Car and Truck Expenses section of the Schedule C and enter your information. To use the standard mileage rate, this must be chosen the first year the car is available for use in your business. After the first year, you may choose to deduct either the standard mileage rate or the actual expenses. The standard mileage rate has decreased from 58 cents per mile in 2019 to 57.5 cent per mile for 2020.
- To use the Actual Car Expenses, go to the Depreciation section of the Schedule C. List your vehicle information in the Assets section, Basic Information. Click the Listed Property Information tab and select your vehicle type from the drop-down list. Enter your mileage and your actual expenses here.
Actual Car Expenses include: Depreciation, License and Registration, Gas and Oil, Tolls and Parking fees, Lease Payments, Insurance, Garage Rent and Repairs and Tires.
For more information regarding your Car and Truck Expenses, see section 4 of Publication 463.
Business Use of Home: There are two methods to choose from when claiming the Business Use of Home Deduction. You can choose to use the Simplified Method ($5 per square foot - 300 square foot max) or the Regular Method (also called the long method-actual expenses).
To qualify to use the Business use of Home deduction, you must regularly use part of your home exclusively for business. To figure your Business Use of Home deduction, you will also need to know the total square footage of the home and the total square footage of the area used for business.
To use the regular method, you will need to determine if your expenses are direct or indirect expenses:
- Direct Expenses are expenses that only apply to the business part of the home and are deductible in full. For example, painting and repairs in this section of the home only would be a direct expense.
- Indirect Expenses are expenses used for the upkeep and running of the home and are deductible on a percentage basis. These would include items such as utilities and mortgage.
Unrelated Expenses are expenses that are only associated with your home and are not a deductible expense. This type of expense would include items such as lawn care or painting of the home.
When using the Simplified Method, users are allowed to deduct $5 per square foot up to 300 feet. Direct and indirect expenses are not entered. If you wish to enter your direct and indirect expenses, use the regular method.
You may be able to claim a Depreciation deduction on your home if you qualify for the Business Use of Home deduction. You cannot depreciate the land, only the building. For more information regarding the Depreciation of your home, please refer to Publication 587, page 9.
General Expenses: Most of your expenses will be classified as general expenses. These are expenses generated from the daily operation of your business. Examples of general expenses are: a license required to operate your business, utilities, insurance. For a complete list of expenses that can be deducted, please see the Schedule C instructions Part II Expenses.
Other Expenses: This section is for expenses not deducted elsewhere. For each entry, list the type and amount. Use the green Add button to add additional expenses into this section.
Where to enter expenses?
Qualified Expenses relating to your business income can be deducted in the expenses section of your Schedule C, Profit or Loss from a Business.
To enter your expenses for your business, go to:
- Federal Section
- Profit or Loss from a Business
- General Expenses
You may refer to the IRS for a complete list of instruction for the Schedule C.