Fleet owners can make a lot of money by using Turo. This carshare platform allows vehicle hosts to connect with renters in the area. However, Turo hosting is a business, so you must pay taxes on your income. These Turo tax tips explain what you can expect at tax time.
Do Turo Owners Need to Pay Sales Tax?
Turo is a sharing economy service that allows you to list your car for rent. Renters can select travel dates and the location in order to rent your locally-owned car. However, if you plan to turn Turo into a serious business or even just to earn some extra income, you need to consider which taxes you might be responsible for before you begin. Here are a few questions and answers about Turo.com to help you better understand your tax liabilities with regard to sales tax.
Do I Need to Pay Sales Tax?
If your local government charges sales tax on rentals, you must pay sales tax on your earnings. However, if you are wondering if you will need to pay sales tax on a new vehicle that you purchase exclusively for business, then the answer is generally no.
How Much Is Sales Tax?
The amount of sales tax that you will pay will depend on the city or town in which you operate your Turo business. These rates can range from 0% in states that do not charge sales tax to as much as nearly 10% in other states that charge both state and local taxes. A breakdown of the states that charge rental car taxes and the departments that are responsible for collecting these taxes can be found here.
Sales Tax Payments
You must pay sales taxes to the appropriate revenue office. Most states offer web file services that you can use to pay the sales tax owed from your Turo earnings.
If you do not expect to pay or collect any sales or use tax because you haven’t started to operate your Turo business yet or you have no earnings for a specific period, you may still be required to file a zero return.
Standard Mileage Deduction for Multiple Cars
Whether you can claim the standard mileage deduction depends on how you use your vehicles. If you alternate between the vehicles, you can claim the standard mileage deduction. If the vehicles are used simultaneously, you don’t qualify. This restriction affects some Turo hosts because they rent all their vehicles at once. If you qualify under these terms, you can claim the deduction on as many vehicles as you want.
If you want to claim the deduction, you have to keep clear records. Click here to see this year’s standard mileage rate.
If you drive a vehicle while you rent the others, you can’t take the standard mileage rate deduction. However, you can deduct actual car expenses, including depreciation, lease payments, insurance, repairs, etc.
More Turo Tax Tips
These Turo tax tips should give you a better idea of what to expect when you start renting on Turo. However, consulting with a tax professional is always a good idea. The experts at Shared Economy Tax understand exactly how Turo will affect your income. Get started today with a free one-on-one strategy session with a certified tax professional. Our experienced experts understand the Sharing Economy better than anyone else, so we can explain all the ins and outs. For more Turo tax tips, sign up for our free newsletter using the form below.