Here's one for you..

I own a vehicle and am self employed, working from home. I use the mileage deduction when driving to visit clients/business purposes. This is all pretty standard so far, but here's the twist. I rent out my car for extra income using a car sharing program (getaround.com). I keep track of the miles that are driven by the renters and I also keep track of the miles that I use the vehicle for business purposes. Can I use the standard mileage deduction for the miles driven by renters?

IRS Publication 463 says:

Cars for hire and the standard mileage rate.
Beginning in 2011, you can elect to use the
standard mileage rate if you used a car for hire
(such as a taxi).

Is renting out the car to someone considered car for hire?

I understand the IRS has an independent company calculate the fixed and variable costs of vehicles in order to come up with the 55.5 cents per mile, but fuel is a factor in this calculation. Obviously when the car is rented out, the renter pays for fuel.

Thanks in advance...

If it says in the IRS pub that you can use the mileage rate for Cars for hire, then you can use the standard mileage rate, irrespective of who pays for the fuel.

Quote:

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Originally Posted by AtlantaTaxExpert

If it says in the IRS pub that you can use the mileage rate for Cars for hire, then you can use the standard mileage rate, irrespective of who pays for the fuel.

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Does the definition of "Car for hire" cover renting out the car to another party? Or only if you hire out your car as a taxi service and you are the one driving?

Car for hire normally means you are driving the car, but there are so many variations that is impossible to cover all possible considerations. You ARE hiring your car out to someone, so In my opinion, you can use the standard mileage rate.

The owner of taxi (car for hire) is using standard mileage rate. Suppose it has two clients (car sharing). If both clients also use mileage rate, then for 1 mile driven, deduction for 3 miles will be claimed.
I doubt if you can claim standard mileage rate.

Mukata, I believe you cannot claim mileage for a car that you are renting. Only the owner of a vehicle can claim the mileage.

Agreed.

For the renter of the car, the only deduction would be the rent and the fuel, not the mileage.

So I spoke to someone at the IRS, I cannot take the mileage deduction on a car that I'm not driving. So it does not qualify as "car for hire".

So now my next question, do I report rental income from a vehicle as schedule C or schedule E?

My primary business is obviously not renting out vehicles so that leads me to believe it's schedule E. How would I then expense out oil changes, registration, new tires etc.

More information I found:

Personal property. Do not use Schedule E to report income and expenses
From the rental of personal property,
Such as equipment or vehicles. Instead,
Use Schedule C or C-EZ if you are in the
Business of renting personal property.
You are in the business of renting personal property if the primary purpose for
Renting the property is income or profit
And you are involved in the rental activity with continuity and regularity.
If your rental of personal property is
Not a business, see the instructions for
Form 1040, lines 21 and 36, to find out
How to report the income and expenses.