Inputting Actual Expenses Knowledgebase

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Inputting Actual Expenses

Actual expenses include the cost of gas, oil, repairs, insurance, and depreciation on a vehicle. If you use your car for business purposes, you ordinarily can deduct expenses related to the car or truck. To determine the amount of car and truck expenses that can be included in actual expenses or the total business expenses reported on Schedule C, Schedule C-EZ, Schedule E or Schedule F you must use on of the following two methods:

Standard mileage rate

Actual car expenses

NOTE: If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments that you can deduct.

Armed Forces members who use their own vehicle to travel for work are entitled to deduct actual expenses or the standard mileage rate to figure the deductible costs of operating their vehicle for business purposes.

Select the links below to show/hide additional information:

To Report Actual Expenses On Form 2106

From the Main Menu of the Tax Return (Form 1040) select:

Itemized Deductions

2% Deductions and Job Expenses (2106)

Employee Business Expenses - 2106

Select either Taxpayer or Spouse

Enter the Type of Occupation

Select Vehicle Expenses

Input the Descritpion, Date Vehicle was placed in Service and Mileage

This will lead you to the Form 2106 Vehicle Information Menu

Select Actual Expenses

Input Actual Expenses

To Report Actual Expenses For A Reservist On Form 2106

From the Main Menu of the Tax Return (Form 1040) select:

Adjustments

Business Expenses of Reservists (2106)

Select either Taxpayer Business Expense Deduction or Spouse Business Expense Deduction

Enter the Type of Occupation

Select Vehicle Expenses

Input the Descritpion, Date Vehicle was placed in Service and Mileage

This will lead you to the Form 2106 Vehicle Information Menu

Select Actual Expenses

Input Actual Expenses

To Report Actual Expenses On Schedule C

From the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Business Income/Loss (Sch C, C-EZ, 1099MISC)

Select 'New' or double-click the entry you wish to 'Edit'. Select 'Pull' if you prepared the return using the software in the previous year and wish to pull the data forward. Fill in all items on the Vehicle Information Entry Screen.

Select Schedule C or Schedule C-EZ

Enter a Principal Business Activity Code. This is a code used by the IRS to classify the type of business being operated. If you do not know the code, you have two options:

You can select the PDF Icon to view an entire list of activity codes, or
You can select the Magnifying Icon to search by category. If you search by category, double-click on the business code that represents the type of business and the code will fill in automatically for you.

Input the heading information in the Schedule C Data Entry Menu. This will include the name of the business, the business address, and the zip code. The city and state information will fill in automatically based on the zip code that is entered.

At the Schedule C Questions Menu, there are several items that need review. The questions on this menu are defaulted to the most common answers for most taxpayers. However, review these questions to make sure the answer provided is correct for the taxpayer's situation. You may need to adjust one or two items to reflect the way the taxpayer's business is operated.

Select Expenses

Select Car & Truck

Select Car & Truck (Actual Expenses - Schedule C)

Select 'New' or double-click the entry you wish to 'Edit'.

Actual Expenses paid should be entered in the box provided.

To Report Actual Expenses And Depreciation For An Asset On Schedule C

From the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Business Income/Loss (Sch C, C-EZ, 1099MISC)

Select Schedule C or Schedule C-EZ

Enter a Principal Business Activity Code. This is a code used by the IRS to classify the type of business being operated. If you do not know the code, you have two options:

You can select the PDF Icon to view an entire list of activity codes, or
You can select the Magnifying Icon to search by category. If you search by category, double-click on the business code that represents the type of business and the code will fill in automatically for you.

Select Expenses

Select Depreciation

Select Depreciation Module

Select 'New' or double-click the entry you wish to 'Edit'

Input all Depreciation Data, select 'OK'

Select Listed Property and select the type of listed property.

Input all mileage information. This will determine the percent of business use.

Enter the amount of actual expenses paid. If you would like to create an itemized list of the expenses, press F10 on your keyboard and make an entry for each expense.

To Report Actual Expenses On Schedule E

From the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Rents, Royalties, Entities, (Sch E, K-1, 4835, 8582)

Rents and Royalties

Select 'New' or double-click the entry you wish to 'Edit'. Select 'Pull' if you prepared the return using the software in the previous year and wish to pull the data forward.

Input the Schedule E Data

Select Expenses

Auto & Travel

Car & Truck (Actual Expenses)

Select 'New' and enter in all information as prompted. Leave the cost as $0 if you do not want depreciation to calculate.

Input the Mileage and then you will be prompted to input the Actual Expenses

NOTE: If you do not want to take a depreciation expense on the vehicle, leave the Cost basis at $0.00. Part V of Form 4562 is required to be filled out if you are taking actual expenses.

To Report Actual Expenses And Depreciation For An Asset On Schedule E

From the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Rents, Royalties, Entities, (Sch E, K-1, 4835, 8582)

Rents and Royalties

Select 'New' or double-click the entry you wish to 'Edit'. Select 'Pull' if you prepared the return using the software in the previous year and wish to pull the data forward.

Input the Schedule E Data

Select Expenses

Depreciation

Depreciation Module

Select 'New' or double-click the entry you wish to 'Edit'

Input the Depreciation Data as prompted

Select Listed Property

Select the Type of Listed Property

Input the Mileage and then you will be prompted to input the Actual Expenses

To Report Actual Expenses On Schedule F

From the Main Menu of the Tax Return (Form 1040) select:

Income Menu

Farm Income (Sch F)

Select 'New' or double-click the entry you wish to 'Edit'

Select either Taxpayer or Spouse

Input the Business Code

Input the Schedule F Data

Select Exit Menu until you reach Schedule F - Edit Menu

Select Expenses

Select Depreciation

Select Depreciation Module

Select 'New' or double-click the entry you wish to 'Edit'

Input the Depreciation Data

This will lead you to the Depreciation Data Entry Screen

Select Listed Property

Select 'YES'

Select the Type of listed Property

Input the Mileage and then you will be prompted to input the Actual Expenses