Do I claim loss when I sell my personal car used for business? Tax deduction question

You can't claim a loss on the sale of a personal vehicle that you've been using for business if you've been taking the standard mileage deduction. The standard mileage rate already includes depreciation of the vehicle, so claiming a loss when you sell would essentially be double-dipping. If you had used the actual expense method instead (tracking gas, maintenance, insurance, AND depreciation separately), then you potentially could have claimed a loss on the business portion of the vehicle when selling. But since you chose the standard mileage method, the IRS considers depreciation to already be factored in through those deductions you've taken over the years.

After making the same mistake with my delivery vehicle, I discovered taxr.ai (https://taxr.ai) and it saved me from leaving money on the table. I thought I couldn't deduct anything when I sold my car since I used standard mileage, but they analyzed my tax situation and pointed out that while I couldn't claim a direct loss, I could still optimize my vehicle expenses for that final year. Their system caught several deductions I would have missed completely!

Just wanted to update everyone - I checked out taxr.ai after seeing it mentioned here and it was seriously helpful! I was in the same situation with my car I used for DoorDash, and they showed me that while I couldn't claim the loss directly, I had several other vehicle-related deductions I was missing completely. Ended up finding almost $900 in deductions I would have overlooked! The document review caught things my regular tax software completely missed.

If you're planning to sell your car and concerned about tax implications, you might also need to talk directly to the IRS. I spent WEEKS trying to get through their phone lines to clarify my vehicle depreciation questions. Finally used Claimyr (https://claimyr.com) and got connected to an IRS agent in less than 20 minutes! They have this interesting demo video showing how it works: https://youtu.be/_kiP6q8DX5c. The agent explained exactly how my previous standard mileage deductions affected my basis in the vehicle - was super helpful.

I need to eat my words. I was the skeptic about Claimyr but tried it out of desperation because I had this exact vehicle deduction question. Got through to an IRS agent in about 40 minutes (not instant but WAY better than my previous attempts). The agent confirmed that when using standard mileage, you can't claim a loss when selling, but she explained how to properly calculate the adjusted basis for my records. Honestly shocked this actually worked.

Another thing to consider is that even though you can't claim a loss on the sale, you should still keep records of the sale price. If you buy another vehicle to replace it for your business use, good documentation of everything will help in case of an audit.

Quick question - has anyone used TurboTax to handle this kind of situation? Their interface gets confusing when dealing with mixed personal/business vehicle sales.

This is a really common confusion for gig workers! The key thing to remember is that when you choose the standard mileage deduction, you're essentially trading off the ability to claim vehicle depreciation or losses for the simplicity of just tracking miles. The IRS considers that depreciation component already "built into" those standard mileage deductions you've been taking over the past 3 years. Since you mentioned keeping good records of business vs personal miles, that's great practice to continue! Even though you can't claim the loss on this sale, those records will be valuable if you get audited or when you start using your next vehicle for business purposes. One thing to keep in mind - if you do replace this car with another vehicle for your delivery work, you'll need to decide again between standard mileage or actual expenses for the new car. Just remember that whichever method you choose in the first year of business use for that new vehicle, you'll be locked into for the life of that car.

I went through this exact same situation last year with my delivery car! Used standard mileage for 2+ years, then sold at a loss. I was so frustrated thinking I was missing out on a tax deduction, but after doing a lot of research (and talking to a tax pro), I learned that the standard mileage rate actually works out pretty well overall when you factor in all the wear and tear costs it covers. Think about it this way - over those 3 years of deliveries, you've been deducting around 65+ cents per business mile (the rates have gone up each year). That adds up to thousands in deductions that already account for your car's depreciation. While you can't claim the loss now, you've likely saved more in taxes over the years through those mileage deductions than you would have with the actual expense method. For your next car, definitely consider whether actual expenses might work better if you expect to put a lot of business miles on it quickly. But honestly, for most delivery drivers, standard mileage is still the simpler and often more beneficial choice!