Jason is a freelance programmer and tech consultant working from an office in his condominium. In 2014 Jason drove his old Toyota Carolla 2000 miles visiting clients. Jason used the standard mileage method come tax time. His standard mileage deduction was $1,120.
In 2015 Jason landed a big long term contract and replaced the Carolla with a $60,000 Porsche Boxter. He drove about the same number of business miles as in 2014. Come tax time, Jason, using tax prep software entered his car expense info, including gas, maintenance and depreciation expense.
Jason’s Turbotax program calculated his new vehicle deduction both ways. Using the Standard Mileage method Jason got $1250 as a deduction. But under the Actual Expense method, the tax program showed that Jason gets a tax deduction of almost $10,000!
Question: Can Jason legally switch from the Mileage method to the Actual Expense method in year 2?
Answer: Good news for Jason. The tax code allows switching methods from year to year – with two limitations
If this sounds a little complicated, no worries. A tax preparation program like Turbotax will walk you through it, or use a professional tax preparer.