Introduction
Renting your car on Turo can be very lucrative. It becomes even MORE lucrative when you play to WIN by strategizing your Turo INCOME AND your Turo TAX DEDUCTIONS.
Everyone understands Turo income, but very few understand Turo deductions.
Let me show you where to look and how to claim those deductions. Look away, Uncle Sam.
Note, I am not a licensed tax professional and this is not legal tax advice. You need a CPA.
What is a Tax Deduction?
A tax deduction is a business expense that lowers your taxable income. For example, if you earned $100 on Turo but also had to put a $75 tire on the car, then you can deduct the cost of that tire as a business expense. Now you only need to pay income tax on $25!
Here is how that math looks:
$100 revenue from Turo
-$75 tire expense deduction
=$25 in net income
Only the $25 is taxed as income!
Tracking and claiming tax deductions can seriously increase the profitability of your Turo business! Read on!
What Do These Changes Means To Turo Hosts?
In order to claim business expenses as tax deductions you need to keep IRS-worthy records of every expense in your business. If you’re not using accounting software yet, you need to go over to Wave and create a FREE account and start using it right now! Wave is a free accounting software suite that works great for small Turo businesses.
The IRS requires you to keep records and receipts of all expenses for at least three years. Wave easily allows you to attach receipts to each transaction right inside their software for safe keeping. It’s pretty slick.
What Are Some Tax Deductions For Turo Hosts?
Here are 53 questions to ask yourself that could result in a tax deduction for your business.
1. Take an Uber to pick up your car from the airport?
2. Buy lunch for your team?
3. Buy office supplies for your office?
4. Buy a part to fix your Turo car?
5. Add any upgrades to your Turo car?
6. Drive your personal car for your Turo business? Log those miles!
7. Change the oil in your Turo car?
8. Buy new tires for your Turo car?
9. Pay any local registration or business license costs?
10. Pay to park your Turo car at the airport?
11. Pay any tolls to drop off your Turo car?
12. Pay insurance on your Turo car?
13. Pay Turo fees?
14. Pay your spouse or children to help run your Turo business?
15. Invest in a business mentor?
16. Pay Google or Apple for cloud storage for your business phone?
17. Use your personal phone for your Turo business?
18. Buy a new phone for your Turo business?
19. Use your home internet to run your Turo business?
20. Have a dedicated space in your home that you use to run your Turo business?
21. Have a computer you use to run your Turo business?
22. Use your garage to run your Turo business or house your vehicles?
23. Buy an e-bike or scooter for Turo vehicle drop offs?
24. Pay for accounting software to run your Turo business?
25. Buy cleaning supplies to clean your Turo car?
26. Buy an ozone machine to get the smoke smell out of your Turo car?
27. Have lunch with a prospective cohost or investor?
28. Have lunch with your coworker spouse and discuss your Turo business?
29. Provide snacks for your customers?
30. Pay for a vehicle tracker?
31. Buy any chargers or other accessories?
32. Buy new floor mats?
33. Buy any tools for a car fix?
34. Pay any business taxes, licenses, or insurances?
35. Take your car to a car wash?
36. Make a lease or other payment on your car?
37. Pay for AAA or other roadside assistance programs?
38. Pay for ad placement or marketing for your Turo business?
39. Buy gas in your Turo car before driving to the drop off?
40. Pay for any subscriptions on your Turo vehicle?
41. Buy paper towels for your Turo garage?
42. Create a website for your Turo business?
43. Pay any travel expenses for your Turo business?
44. Buy a new computer for your Turo business?
45. Pay for a music service like Spotify, Apple music, or Sirius XM for your Turo business?
46. Pay for Google Photos or iCloud photo storage for your Turo receipt storage?
47. Do you have special clothing or uniforms you wear for your business?
48. Buy a new desk for your Turo business?
49. Buy a new office chair for your Turo business?
50. Run your Turo business from your home? You could write off a portion of your home utility bills
51. Wash your Turo cars at home? You could write off a portion of your home water bill
52. Run your Turo business from your home? You could write off a portion of your home property insurance
53. Buy any home office furniture for your home Turo business?
What About Car Payments?
What About Car Payments?
Do you have a car payment on your Turo vehicle? There are two parts of every car payment, interest and principle:
Interest is a tax deduction. Easy.
Principle is NOT a tax deduction! Dang.
BUT at the end of the year you can claim a HUGE tax deduction called “depreciation!” What is depreciation? Depreciation is simply the value your car has lost while you owned it. If you bought it for $10,000 and can now only sell it for $8,000, your car has $2,000 in depreciation. The IRS recognizes that lost value and allows you to deduct it from your taxable income as an expense! You don’t even have to sell the car!
So while the principle portion of your payment isn’t a tax deduction, the depreciation expense typically makes up the difference.
Calculating depreciation is a very messy process and should only be done by your CPA, but the tax savings from this expense alone will be worth more than what you pay the CPA.
Conclusion
Tracking your business expenses and strategically using them to reduce your taxable income is just as important as tracking your Turo revenues. If you’re only tracking revenues then you’re only playing half of the game! Play to win!
