How to Report Car Rental Income and Deductions

If you’ve been in the car-renting space for a while, you should have known that the money earned from renting your car on peer-to-peer car rental platforms is taxable. The good news, however, is that you can deduct depreciation and other related expenses. Here are some IRS rules regarding  car rental income and deductions;

IRS Rules for Reporting car rental income

The IRS classifies income from car renting as ‘rents from personal property.’ And this income is subject to federal and state income tax, and in some cases, self-employment tax.

The latter applies to business income and is reported on Schedule C. Nonbusiness income is reported on Schedule 1 and Line 8 of Form 1040.

IRS Rules for Reporting Car Rental Deductions

You qualify for a car rental deduction only if you’re self-employed. Your deductions are netted against your business income on Schedule C.

Nonbusiness expenses are considered hobby expenses; expenses from something you do for pleasure without expecting profit from it. Generally, car rental deductions covers;

• Depreciation
• Interest
• Marketing expenses
• Expenses for car rental use
• Car washes
• Repairs