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10893: 1040 - Auto Expenses


1040 Individual Data Entry

How do I report auto expenses (actual expenses or mileage) in Drake Tax?

When a vehicle is used for business, the taxpayer may qualify to deduct either mileage or actual expenses (including depreciation, if applicable) for a car or truck on their tax return. To enter this information in Drake Tax, follow these steps.

  1. Enter information about the vehicle on the 4562 screen (even if only deducting mileage).
    • For box: choose AUTO
    • Multi-form code box: Enter the number that corresponds to the AUTO screen (i.e. 1 for the first auto screen).
    • Description
    • Date Acquired
    • Cost
    • Business use %: leave blank. 
    • Used Property checkbox: check if applicable. 
    • Listed Property Type: choose the appropriate type (V, E, T, H or N)
    • Property Type 12__ drop list: choose the type of property. 
    • Method
    • Life
  2. On the AUTO screen for this vehicle, first select to which form or schedule the vehicle belongs and enter the corresponding MFC for that schedule.
    • The choices are: Schedule C*, Schedule E, Schedule F, Form 4835, or K-1 from a Partnership.
  3. Enter the same description and date placed in service as appeared on the 4562 screen.  
  4. Answer the four required questions about business/personal use of the vehicle. 
  5. Enter the Current Year Mileage
    • The current year business mileage is used to calculate the business use of the vehicle.
    • You can see this calculation on Wks AUTO in view mode.  
    • Business miles are required whether the taxpayer elects to use mileage or actual expenses for the vehicle.  
    • This will avoid EF Message 5843. 
    • Prior year mileage data can be entered in the bottom left portion of the AUTO screen.
  6. Enter any other applicable Expenses (optional if taking mileage).  
    • Calculated depreciation will flow from the 4562 screen. 
  7. When you have entered both mileage and actual expenses on the AUTO screen, the software will select which is the most advantageous, unless you select Force mileage or Force expenses

*If the return contains a Form 4562 for the same Schedule C that has been selected on the AUTO screen, the vehicle information will flow to the 4562, and the second page of the Schedule C is not produced.

Note: If Form 4562 is unnecessary (as when the asset is beyond its recovery period), its production can be suppressed by checking the option Print Form 4562 only when required at Setup > Options > Form & Schedule Options.

Other Entries or Adjustment Fields

The above steps will calculate the auto expenses based on the entries made. The following entry points may be used to adjust the calculations or in lieu of the above; see notes for details.

  • Screen C, line 9
    • Adjusts the calculation, however, this entry also requires AUTO or 4562 screen
    • EF Message 0183 is produced listing the requirements. 
  • Screen F, line 10
    • Adjusts the calculation, however, IRS instructions require a 4562 screen.
  • Screen E, line 6
    • Adjusts the calculation, however, IRS instructions also require 4562 screen.
  • Screen 2106, lines 11-16 & 18-21 (mileage), lines 23-25 (actual expenses)
    • Starting in Drake18, this screen can only be used by certain taxpayers; see restrictions at the top of the screen before using this option.
  • Screen 9 Sections B & C of Part V of Form 4562
  • Screen 4835, line 8
    • Adjusts the calculation, however, IRS instructions also require 4562 screen.

Troubleshooting 

If you enter a AUTO screen without a corresponding 4562 screen, the following issues may occur: 

  • Vehicle not printing on Schedule C page 2 or Form 4562, page 2.
  • Rejects SC-F1040-003 and F4835-004

To resolve these issues, enter a 4562 for each AUTO screen and mark the 4562 listed property code correctly.

If there is more than one CFE, K1P, or 4835 screen, or combination of these screens, try to select the option Print Form 4562 only when required at Setup > Options > Form & Schedule Options.


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