Q. This is my first year as a ridesharing driver. I would like to use the actual expenses method to calculate my mileage deduction for 2018 because I paid for some major repairs. Thus, my actual expenses for the year are higher than usual.

If I use the actual expense method this year, will it prevent me from using the standard mileage rate next year?

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A. The answer is YES. Using the actual expense method the first year you place your car in service in your ridesharing business will prevent you from using the standard mileage rate the following year or any other year. You must use the standard mileage rate in the first year you use a car for business, or you cannot use that method for that car forever into the future.

If you use the standard mileage rate the first year, you can switch to the actual expense method in a later year. For this reason, if you’re not sure which method you want to use, it’s a good idea to use the standard mileage rate the first year you use the car for business.

However, if you want to deduct your car repair expenses, you may decide to go ahead and use the actual expense method even though it will prevent you from using the standard mileage rate in the future. It’s not that much harder to use the actual expense method. Mainly, you need to keep track of how much you spend on gas and other car expenses, as well as your mileage.

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Another reason to use the actual expense method is that it allows you to take a depreciation deduction for your car. The Tax Cuts and Jobs Act substantially increased the annual depreciation deductions for cars.

You can claim a depreciation deduction up to $18,000 for cars designated for business use during 2018. The deduction assumes the vehicle is used 100 percent for business or minus the percentage of personal use.

Stephen Fishman

Stephen Fishman

Stephen Fishman is a self-employed tax expert and regular contributor to MileIQ. He has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for entrepreneurs, independent contractors, freelancers and other self-employed people. He is the author of over 20 books and hundreds of articles, and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Visit Fishman Law and Tax Files for more information on his work.
Stephen Fishman

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