|I let TurboTax take care of the nitty-gritty details. I took the so-many-cents-per mile on all my tax returns. But the idea is that a publication from the IRS, which TurboTax summarized, gives the cents per gallon that are considered depreciation in each year. For example, in 2020, the standard business mileage rate was 57.5¢/mile, and of that, 27¢/mile was for depreciation. |
The program figured out my total depreciation (purchase price - trade-in price), and compared the total miles to the business miles to figure out how much was business depreciation. Then it compared it to the total depreciation I hand indirectly claimed through the standard mileage deduction. It turned out I had claimed more depreciation than I actually experienced, so had to count the difference as a gain on the sale of a business asset.
I suspect this happened for two reasons: old vehicles don't depreciate much per year, but the IRS gives you the same rate regardless of whether you're car is new or old. Also, I got $3500 for my vehicle when I traded it, which isn't bad for a 10-year-old vehicle with about 120,000 miles on it.