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Entering vehicle expenses for a non-depreciated vehicle in Lacerte

SOLVEDby IntuitLacerte Tax130Updated July 14, 2022

Follow these steps to enter vehicle expenses when not depreciating the assets:

  1. Go to Screen 30, Vehicle/Employee Business Expense (2106).
  2. Select the applicable form in the Form (Ctrl+T) dropdown menu.
    • 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)
  3. Select the applicable Activity name or number (Ctrl+T) (code 14) from the dropdown menu.
  4. Scroll down to the Vehicle Expenses subsection.
  5. Enter the Description of vehicle (code 801).
  6. Enter the Date placed in service (code 15).
  7. Complete the mileage information:
    1. Enter the Total mileage (code 16)
    2. Enter the Business mileage (code 17)
    3. Enter the Commuting mileage (code 19)
  8. Complete the Actual Expenses subsection (if you enter information for both mileage and actual expenses, Lacerte will optimize the bigger deduction).

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.
  • Lacerte calculates and prints Form 2106 when Form 2106 or Form 2106/Schedule SE is indicated in the Form (Ctrl+T) field.
  • For vehicles, Lacerte 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.
  • Lacerte 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. Lacerte 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.

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

  • Depreciation - if you enter 6 in Form.  
    • 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.

Lacerte 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.
  • 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.

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