Question

Vehicle depreciation calculation error?

Forum|Forum|1 year ago
March 14, 2025
2 replies
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Put a vehicle in service in 2023 used partly for business.

2023: vehicle cost new: $60,660

Business use: 38%

Depreciation deduction based on 5yr, SL/HY: $60,660 x .10 x .38 = $2,305

2024: business use 88%

Depreciation deduction based on 5yr SL/HY: $60,660 x .2 x .88 = $10,685 - this is what my tax adviser says it should be....

TT24 carried over the correct prior depreciation from 2023 but is showing a basis for depreciation of $53,429 and a deduction of $11,361, both of which appear to be incorrect.

Any insights of how TT24 is calculating my deduction for this year?

M

Mike9241

don't know what you did or what version you are using. I have Desktop Deluxe and created a fake 2023 return using what you provided for 2023 and came up with the same numbers for 2023. when I transferred 2023 data to 2024 and before entering number for 2024 mileage I show a basis of 60660. when I enter 88.07% business usage Turbotax calculates depreciation as $10685.

Your issue may have been caused becuaseTurbotax had some issues with the depreciation worksheets in 2023 and even early in 2024

the 53429 is depreciable basis 60660* 88%

and 20% of 53429 is 10685. My Turbotax does show prior depreciation of $2305

as for the TurboTax number which is wrong because it's trying to apply the 88% usage to year 1 resulting in under-depreciation that it is incorrectly trying to correct.

here's what I think Turbotax is doing

60660 *.88 = 53429

53429 /10 = 5343 what Turbotax feels you should have taken in 2023 because it's using the 2024 business use % rather than the actual for 2023

5343-2305=3038 which is what Turbitax thinks is the under-depreciation for 2023

3038/4.5 =675 the correction Turbotax is mistakingly applying to the remaining useful life - 4.5 years in 2024

+675+10685 =11360

Totally wrong

I agree with you and your CPA 10685 in depreciation for 2024

If you are using online I'm not sure how to correct the issue without creating overrides that will prevent e-file. with any desktop version you can go into forms mode (not available in online) and review the vehicle worksheet.

this would be what should show on various lines in forms mode

33c, 60660

37 & 39, 2305

65, 5

66, ALT

67, HY

there is no asset life history created by Turbotax.

A

AmeliesUncle

TurboTax uses the mathematical method of depreciation, and does not use the "tables".

Mike outlined the way the mathematical method works. It is somewhat debateable if TurboTax using the correct order of operations, but TurboTax and several other major software companies all use this same method and have done so for many, many years.

If you have the CD/downloaded version, you have the option to the vehicle worksheet, scroll way down and check the box to use the IRS "Tables" for depreciation.

M

mbkkmcalliAuthor

Thank you both Amelies Uncle and Mike. I appreciate the math that might explain how TT is calculating. When I checked the block to use the tax tables the figure did correct to 10,685 based on the traditional SL calculation....recognizing that either calculation might be defended in an audit I may just go with the one that is repeatable every year to keep things simple.