How to enter vehicle expenses for a business activity in ProConnect Tax

In ProConnect Tax, there are two screens that you can use to report vehicle expenses while providing the evidence required for e-filing the Individual return. The screen you choose to use depends on whether you are claiming depreciation for the vehicle.

Table of contents:

If the vehicle is being depreciated

The following steps will guide you through entering mileage or actual expenses on a depreciated vehicle to be reported on a Schedule C, E, or F. For Schedule C filers, this information will also flow to the Schedule C, Part IV, or Form 4562, Part V, whichever is applicable.

Follow these steps to enter vehicle information:

1. Go to the Input Return tab.
2. On the left-side navigation menu, click Deductions.
3. Select Depreciation.
4. Enter any applicable information in the Quick Entry grid. The following entries are mandatory:
   • Form
   • Date placed in service
   • Cost or basis
   • Method
5. Click the Details button.
6. Select the Auto & Additional Info. section along the top of the input.
7. Check any boxes that apply.
8. Scroll down to the Automobile Mileage subsection.
9. Enter the Total mileage and Business mileage. Both of these entries are mandatory to calculate the business use percentage.
10. Scroll down to the Actual Vehicle Expenses section and enter any actual expenses that apply.

By default, ProConnect Tax generates a Vehicle Expense Worksheet that calculates the standard mileage deduction and the actual expense deduction. The program will automatically choose the method which produces the largest deduction. Make an entry in 1=force actual expenses, 2=force standard mileage rate to override the automatic optimization.

Back to Table of Contents

If the vehicle isn't being depreciated

The following steps will guide you through entering vehicle information to calculate the actual expense or standard mileage rate to be reported on a Schedule C, E, F, or Form 2106. For Schedule C filers, this information will also flow to the Schedule C, Part IV, or Form 4562, Part V, whichever is applicable.

Follow these steps to enter vehicle information:

1. Go to the Input Return tab.
2. From the left of the screen, select Deductions and choose Vehicle/Emp. Bus. Expense (2106).
3. Select the form you want to link this vehicle to in Form (Click on arrow to select from list):
   • Form 2106
   • Form 2106/Schedule SE
   • Schedule C
   • Schedule E (rental)
   • Schedule F/Form 4835
   • Schedule E (partnership)
   • Schedule E/Schedule SE (partnership)
   • Schedule E (S corporation)
   • Schedule E (estate or trust)
4. Select the Activity name or number (Click on arrow to select from list).
5. Scroll down to the Vehicle Expenses section and enter the following fields:
   • Description of vehicle
   • Date placed in service
   • Total mileage
   • Business mileage
   • Commuting mileage
6. Scroll down to the Actual Expenses subsection and enter any applicable amounts.
   • If actual expenses are entered, the program will automatically figure the greater deduction between mileage or actual expenses. You can force either deduction in the 1=force actual expenses, 2=force standard mileage rate field.

Back to Table of Contents

If vehicle expenses still aren't calculating on Schedule C

On the Business Income (Schedule C) screen, there's an input field for Car and Truck Expenses [Adjustment]. An entry here will flow to line 9 of the Schedule C, but this field may only be used when paper filing a return. When e-filing, the IRS requires evidence to support the deduction. Evidence must appear on either the Schedule C, Part IV, or Form 4562, Part V.

The following critical diagnostic will generate:

"Schedule C: Auto and truck expenses require evidence to support the deduction. Failure to provide this support on Schedule C Part IV or Form 4562 Part V will cause the e-file return to be rejected by the IRS. If the vehicle in question is a heavy truck, mark the listed property check box or choose method 43 or 44 in the depreciation input to satisfy the IRS e-file specifications for Reject 183." Ref #584

This diagnostic may be solved by:

Back to Table of Contents

Vehicle/employee business expense guidelines

Use the Vehicle/Employee Business Expense input fields to report employee business expenses and vehicle expenses for up to two vehicles. Review the following guidelines before entering the expenses:

• Vehicle expenses can be entered in this input screen or in the Depreciation input screen, but the same vehicle shouldn't be entered in both screens.
  • Leased vehicles should generally be entered here.
  • Vehicles on which the standard mileage rate is being taken for the entire life of the vehicle can be entered in this input screen, or in the depreciation screen, but if the vehicle is entered in the Depreciation input screen, you must force the standard mileage rate.
• You may enter up to two vehicles on one Form 2106. If you have more than two vehicles, you'll need to create additional 2106 activities to calculate the expenses associated with the additional vehicles.
• ProConnect Tax calculates and prints Form 2106 when Form 2106 or Form 2106/Schedule SE is indicated in the Form (Click on arrow to select from list) field.
• For vehicles, ProConnect Tax calculates the most beneficial method, actual expenses, or the standard mileage rate. However, an input field is provided to let you force either method.
• For non-leased vehicles, you might need to force actual expenses when the program determines the standard mileage rate most beneficial for the current year, and the taxpayer claimed actual expenses in the vehicles first year of service.
  • According to IRS Pub. 463, the standard mileage method can only be used if you used the standard mileage method in the vehicles first year of service.
• For leased vehicles, you might need to force the standard mileage rate when the program determines that actual expenses are most beneficial for the current year, and the taxpayer claimed the standard mileage rate in the vehicles first year of service.  
  • According to IRS Pub. 463, if you use the standard mileage method on a vehicle, you must use it for the entire lease period.
• ProConnect Tax can calculate auto-expenses and carry the calculation to an alternate schedule (Schedule C, Schedule E, Schedule F, Form 4835, Schedule K-1, or Schedule SE).
  • Make entries in Form and Activity name or number to designate the appropriate alternate form. The program prints a vehicle expense or other business expense schedule in place of Form 2106 when you send information to an alternate schedule.   
• Don't use the Employee Business Expense input section for expenses (for example, meals, travel) related to Schedules C, E, and F. You can use the Employee Business Expense input section for passthrough K-1 expenses.

Back to Table of Contents

Forms affecting Form 2106

ProConnect Tax carries entries made in the following input fields elsewhere on the return to Form 2106.

• Depreciation - if you enter 6 in Form (Click on arrow to select from list). 
  • If an automobile method is entered on the asset, or if mileage is entered on the asset, the asset is treated as an automobile on Form 2106.
• Home office expenses - if you enter 2 in Form (Click on arrow to select from list).

Back to Table of Contents

Forms that are affected by Form 2106

ProConnect Tax carries entries made in the Form 2106 input fields to the forms listed below.

• The business part of Interest and Auto License carries to Schedule C, E, F, or Form 4835 when you use this input screen as a Vehicle Expense schedule. The unused part of Auto License carries to Schedule A.
• Two vehicles can be entered on each tab. If more entries are required, click the +  at the top of your screen to add a new tab.
• If you send more than two vehicles to the same Schedule C, the listed property information carries to Form 4562, Page 2.
• Qualified performing artist expenses carry directly to Form 1040 if you enter 1 in 1=qualified performing artist, 2=handicapped, 3=fee-basis government official.
• Employee with disabilities expenses carry to Schedule A in full if you enter 2 in 1=qualified performing artist, 2=handicapped, 3=fee-basis government official.
• Fee-basis government official expenses carry directly to Form 1040 if you enter 3 in 1=qualified performing artist, 2=handicapped, 3=fee-basis government official.
• Excess reimbursements for expenses other than meals and entertainment carry to Form 1040 as additional wage income.

Back to Table of Contents