How to Get Vehicle Tax Deduction [Over 6,000 lb. GVWR] Auto, SUV & Truck 100% Depreciation Saves Tax
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- Опубликовано: 11 сен 2024
- Vehicle Tax Deduction: How to purchase, title, insure, borrow, pay and document tax deduction on SUV and truck over 6,000 lb. GVWR [gross vehicle weight rating]. SEE ANOTHER NEWER VIDEO ON THIS • SUV & Truck 100% Bonus... AND THEN PART 2 TO THE NEWER VIDEO • Part 2: Vehicle 100% T... See my tax seminars! www.jjthecpa.com/ Buying a car can be tax deductible. Standard mileage rate. Bonus depreciation. Section 179 depreciation. IRS auto depreciation. IRS publication 463. Here’s the 411 on who can deduct car expenses on their tax returns.
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Thanks for these.
@@muletowndumpsters No tax worries there. You would get tax basis for the money you put in; it wouldn’t be taxable income to the biz (as you know).
Man this is THE best explainer I’ve seen on this so far. Its one of those things you see people point out on TikTok in like 30 seconds but you feel like there’s a lot more to it. Thanks for this, definitely subscribed.
Thank you! Thank you! I really appreciate you watching, subscribing and taking the time to share such a generous comment. Let me know if there’s another tax topic I could do a video on, for you! Again, many thanks!
Yes thats how i feel with my frenchie business
A lot of the things you say here are very interesting and helpful. Something to note is that many businesses in the United States are pass through organizations so the business owner would be able to title the car under their name because they are essentially the business.
A major key here is that through 2023 vehicles over 6,000 lb qualify for a 100% depreciation called bonus depreciation that was passed through the tax cuts and jobs act of 2017.
That means you're not just getting the standard $25,000 cap for a vehicle that is used for 100% business, but instead, you are able to write off 100% of the purchase price the year that the vehicle is placed into service for the business through section 179.
Honestly I want my Tax advisor to be a Captain America and Superman fan so I think I really need to call JJ and get him on the team. 😁
I thought the bonus depreciation was available not through 2023, but until Dec 31, 2022? Was this extended or changed?
Brandon ought be giving lectures. Thank you Brandon.
You have a great radio voice! 😍 Thanks for the info.
Thank you Kim D! Appreciate that!!
One of my service vans has over 450,000 miles on it. I bought it for $1500 with 396k & rebuilt it from bumper to bumper. I keep building it into a rolling workshop. I should be in the business of building service trucks!
Wow! No doubt!
Great info. So I understand the deduction: we buy an SUV in company name (no loan cash purchase) use 100% for business use we can write off 100% of purchase price ($95k) even if this results in a loss. New business, no real revenues yet so going to lose $. Our advisor stated suv designation prevents us from writing off entire purchase.
Just came across your comment. Thanks Brian! Yes, if a business, can depreciate, even if a loss. SUV is limited under Section 179, but not Section 168.
Check out my latest video where I cover this ruclips.net/video/Ce-xd007kkc/видео.html
This was so right on time.
Awesome!!
If all you do is work, it's not too complicated. I cover over 100 miles per day doing services 8 - 12 hrs/ day. When I get home (back to the shop), I've got groceries & supplies. I pay myself enough to cover the groceries & supplies.
Thanks for watching! For sure you hit 100%, and smartly so!
Great information JJ! Appreciate it
Thank you, thank you!
Excellent summary of the code. Thank you.
Just came across your comment. Thanks for watching!
Love ya, JJ! Thanks for the tax know how!!
Thank you Ivy! Much love!
You should have mentioned irc section 1231.
Thanks JJ
Definitely helpful!! Thank you!
Thanks Mr. W!
If have a semi truck for business it 100% the vehicle I would just do millage rule from what I understand I still deduct a little of value at the end .
That’s possible.
Very informative. Thank you so much!
Just came across your comment. Thanks so much for watching!
Increíble video, are you taking on new clients?!?
David! Just came across you comment. Thanks for watching! Thanks so much for asking! Hopefully you have found somebody to help you. I wish I was, but I haven’t been taking on new clients since 2018. I appreciate you!
Great info, just one quick question. Does the truck loan have to be paid off or could it be an active loan being paid off throughout time even after the year end?
Thank you! Financing has no bearing on what you depreciate or write off. The purchase is the amount to depreciate. Of course, you can deduct the interest portion of payments, but the principal portion of payments is not a tax deduction because it is from the purchase price; which has already been accounted for.
Assuming you're honest, outside of a farm equipment use, are there many instances that taking the full write off up front makes more sense than just writing off the mileage? Also, in regard to the business owning and paying for the vehicle, how does that work for a sole proprietor?
If you’re a sole owner using your personal vehicle then take the mileage. If it’s a company vehicle listen to what he says.
1) When you have low mileage 2) you have low mileage for business 3) you buy an expensive SUV/Truck 4) You are having a big tax year and not as much in future. Works same for sole prop if have an LLC or if no formal business, title and loan in biz name don’t come into play.
And, I’m always honest. Why wouldn’t I be? I’m a CPA for starters.
@@JJTHECPAusa no assertion that you are not honest, I meant it from the tax payer’s perspective. I appreciate your channel so much.
That makes sense though for expensive vehicles or general low mileage usage. Thank you for the info! A video discussing when to do mileage vs this way would be super interesting to me. Thank you!
I subscribed.
Just came across you comment. Thanks for watching and subscribing!
Sole proprietor fall under this?
Hi Mr CPA hope you are doing well
Can you give a little brake down on how to deal with a Rental vehicle for the business
Thank You
Love that! Rental would be 100% deductible, including gas spent! Deductible in the year you pay for it!
JJ you ever dismantle a foundation? I do not mean give it to another foundation. I mean unravel it because the founder was demented and it should have never been a foundation in the first place.
Reconstitute all past tax returns as an individual would have done. Pay the taxes and keep the rest.
Sound like a plan?
Interested?
Oh goodness! I have not. What a feat! I haven’t taken on clients since 2018, but appreciate it! Sorry for delay. Just came across you comment.
@@JJTHECPAusa does that mean you would consider it?
Let's go IRS!
Thank you
Thanks Steve! G50:1
I keeping trying to watch this
Tested it and not seeing any issue.
Is it considered 100% business use if a car is for a employee who uses it for commuting? Ie part of a compensation package? Also if a vehicle is written off to $0 over 5 years is it practical to sell to a non family member for under market value after that time? Say $500 on a $50,000 when new vehicle.
Does putting a vehicle to rent out on Turo apply for complete business usage?
Yes, for sure, if that’s all it’s used for.
Awesome video! Quick question, I have 4 rental units that I am renting and it’s 2hours away, I drive there 2x a month. Would like to buy an EV SUV (heavy GVWR) and like to apply Sec 179 and the $25k plus the yearly expenses. I was told that, rental business would not apply due to its Passive activity like. Any feedback would be appreciated. Thank you.
Edwin! Thanks for watching! Great question. Let me unpack this answer with several separate comments.
The vehicle deduction is always allowed, to the extent of its business use, regardless if a passive or non passive activity. Anyone who would argue that would be arguing against themselves because if you can’t depreciate and deduct a vehicle in a passive activity, then how you can deduct or depreciate anything in a passive activity… meaning, vehicle is just like any other asset.
Now, if reporting rental properties on Schedule E of your indivisible return… STOP that and report in an LLC taxed as partnership. With real estate reported on Schedule E by default it’s passive, the IRS doesn’t view the activity as a trade or business and thus you CANNOT take Section 179 on “any asset” related to Schedule E. You can take Section 168 though. You don’t have these automatic defaults when reported in an LLC taxed as a partnership. Still could very well be passive, but with 4 properties, IRS would be hard pressed to say it’s not a trade or business. I’ve won this in audit, easily as it’s just factual.
I would NOT recommend Section 179 on the vehicle in a real estate or passive activity because
1) the depreciation under 179 can only be recognized to the extent of net income (which is typically low in real estate) and
2) if your business usage isn’t at least 50%, you can’t take 179 (and if it was more than 50% in a prior year but drops to less than 50% in a future year, you have to recapture the depreciation which means you recognize any previous 179 depreciation as income immediately, which sucks!).
For bonus 168 depreciation, it is allowed regardless of net income and there’s no 50% business usage requirement. So is most all circumstances we use section 168 with vehicles.
I think anyone who said the vehicle wouldn’t apply in a passive activity gave a lazy answer because it’s only 179 that wouldn’t apply on Schedule E.
Can a UBER DRIVER( Self-Employed) take that deduction? Assuming the vehicle only use for business purposes.
Can I put my car into service on December 31 and use it that day only for business and then claim it was used for 100% business and then write off 80% of the cost in 2023?
Absolutely, positively yes.
What if your Uber/Lyft driver when it comes to documentation being done properly? There’s no business name just ny name
Excellent content JJ! What will your recommendation be for someone’s new business active and getting income starting 11/2022? Is it wise to buy an suv ($60-100K) for business usage only and claim bonus depreciation? (Company does not have credit yet). Is it better to wait until the company has earned more income by next year?
Thank you!
Thanks for watching! Even though the 100% drops to 80% next year, with my client, I would recommend buying the vehicle next year as it more likely will have a much bigger tax impact against a full year of income which most likely also taxed in the higher tax brackets.
Even though 80% in 2023, that’s just the “immediate” deduction. You potentially can deduct the remaining 20% over 5 years.
Appreciate the feedback my friend!
If I bought a truck is the sales tax deductible?
Would having a big magnet of the business logo on the car as advertising call for 100% business usage?
IRS states the usage is based on the miles driven for business . What’s on the car may help the argument of business usage but it’s not a defining factor.
If a biz owner bought a $100K SUV with a GVWR > 6000lbs, and used it for 2yrs and then sold it for $80K what are the tax ramifications? Recapture and/or Capital Gain.
I believe because you did not sell for a profit then you don't have to worry
Both recapture and capital gain
Is there an easy way to search for accountants that specialize in the trucking industry specifically in the state of nj?
Just came across you comment. Thanks for watching! You probably found somebody but here is a link to the Society of New Jersey CPAs as a start. Best of luck! www.njcpa.org/resources/resources-by-audience/consumers/findacpa
It looks like small business sole proprietors will not be able to use this deduction because sole proprietors may put their assets under their name and not their business name. :/
Actually, sole proprietor for sure gets this deduction. When a sole proprietor, the one aspect of putting in the business name won't apply.
Great info! What if you're a real estate agent ( schedule c) but don't have and LLC or and S Corp.?
Great question! My fiancé is now a real estate agent, and we set up an LLC classified as an S Corp. but if you’re schedule C, all works the same except you don’t have to title the vehicle in the business name.
It seems that you can also deduct a light vehicle. For example a real estate agent driving a car around for showings. So not a GVWR above 6000 maybe a camry or something, but still can be deducted. Section 179 still applies here, from what I see?
My accountant said it's not the same.
For the real estate professional, most of the time, mileage would yield a bigger deduction year after year; assuming high miles. If it’s under 6,000 lbs GVWR, Section 179 doesn’t apply. Thanks for watching!
If you’re sole proprietor, and loan is in my name is it deductible
100% yes!
JJ, I understand the 100% year one tax deduction for over 6000 lb GVWR declined to 80% for 2023. Is that correct? If yes, how do you deduct the remaining 20%?
You are correct. Great question! The remainder is depreciated (deducted) over 5 years.
Spouse is a is a 1099 healthcare worker. Can she write off a newly purchase SUV she uses to commute to her clients and work?
It should, if your spouse maintains a home office because then under self-employment rules thats not a commute, but business miles. If spouse is driving to/from W-2 job, those miles won’t count.
Assuming I follow all of the rules explained in your video, can I bonus depreciate a business vehicle against my W-2 income?
Unfortunately not, as current law doesn’t provide a deduction any longer on Schedule A.
Hi- great video. I have an LLC and I want to buy a new truck. can i still take advantage of the bonus depreciation if i buy it under my personal name or does it have to be purchased & titled under the LLC? thx.
Thanks for watching! If you are filing a schedule C it would be acceptable that it is only in your personal name. However best practice would be that if you have an LLC, filing as a schedule C, that you would title the vehicle in the name of the LLC, to cover all bases.
You mention that the loan must be in the name of the business - or business and owner. Does the vehicle have to be purchased with a loan? I can still get the deductions by paying cash - right?
Great question! No, as the deduction is simply the purchase price. The reason the loan needs to be in the business name is to be able to tax deduct the interest on the loan.
So sorry for the late reply on my end. I don’t know why I am just seeing this today.
Great info. If i were purchase a truck for a brand new business with minimal revenue initially, can i depreciate 100%?
Just came across your comment. Yes, you can.
Thanks for watching!
Thank you JJ
What is the method for the IRS to depreciate a boat?
Thank you
If for business use, over 10 years, MACRS with bonus (168) avail and possibly Sec 179. See link and section called “Which Property Class Applies Under GDS?” www.irs.gov/publications/p946#en_US_2020_publink1000107509
@@JJTHECPAusa Thank you so much.
Would this also apply to used trucks purchased? I purchased 15 vehicles for my landscaping business - 3 are brand new purchased with a note - 12 are used purchased cash through the business
New to you ... can be used.
Question: I have a personal car I have been using for 3 year. Next year my wife plans to user this car for her business (sole proprietor) 100% of the times. How would I calculate depreciation? Do I need to sell the car to her first or can she take the estimated cost of the car from KBB and calculate depreciation via actual expense method.?
Take mileage
Rhay, great question! The law would specifically allow/require you use the original purchase price for deprecated if using actual expenses. There are two requirements to depreciate any asset, including a vehicle, which is that you have purchased it and have placed it in service for business. So it is very customary that someone may buy an asset that in a later year is used for business purposes. So in the year that it is used for business purposes then that is the year that the depreciation would begin. The IRS would require that you use the original purchase price, regardless if you try to sell it to your spouse or any other method, because the IRS would only would allow the original purchase price to be used. Thanks for watching, and subscribing!
If the EIN is under my spouse but thr car loan is under me(wife due to credit score), can it be used for tax deductions? Thank you
If you file schedule C, that would matter. If you file S Corp or partnership return, simply add the business to the car title, as that’s the key component.
How does the IRS know if people use the vehicle for business I'm sure everyone lies
I hear ya… but… Under circular 230 by the IRS it requires that you provide true and accurate information under the penalties of perjury. If someone does not report correctly, lies, they have committed perjury and have committed fraud.
Hi, I'm looking for help on a situation. If a new multimember LLC has 60,000 left over in 2022 after making all expense payments how could the three members purchase a vehicle for 100% business use to take part of that write off in 2022?
Thanks for watching. The business buys/owns it, and deduction reduces the biz income just like other expenses and thus each owner experiences the tax benefit as the income allocated to them was reduced.
@@JJTHECPAusa So if the 3 owners financed 60k worth of a vehicle they wouldn’t owe any taxes on the splitting the 20k each they had in cash if they split it?
@@alexmunoz8952 If the biz net income was $60K and a qualifying vehicle at $60K was bought this year, the net income of the business would be zero.
regarding title/loan what about sole proprietorships where the business legal name is my name?
Great questions! Wouldn’t be applicable to sole proprietor.
Thanks for watching!
Are there any different stipulations for vehicles that are rented through Turo?
In terms of the owner, renting a vehicle they own, there is not a different stipulation from what I shared, or known otherwise.
@@JJTHECPAusa ok.. I was looking at side hustle passive income through already and wanted to see if still applies. I already have LLC with EIN and was curious if tax benefit is worth purchasing vehicle under business before end of year.
None specific other than requirements for age of vehicle and owner determines price, duration and drop off fees. I follow a few people they do it and they exclusively just buy a vehicle and rent it on Turo and it pretty much pays for itself.
@@wesleyschutt4857 Awesome! Bonus depreciation is under IRC Section 168, and is allowed whether it’s a passive activity or not.
What if you pay cash for the vehicle?
I answer that in this video, but doesn’t matter ruclips.net/video/xp96iJCUpa8/видео.html
And they shutting it down
Shutting what down?
I drove for Instacart and bought a new SUV does this count?
How do I get with you
Appreciate that but I’m not for hire
Great video! I am wondering what happens if you have a single member LLC. Is buying the car under your name okay then since it’s a disregarded entity?
Just came across your comment. Yes, that should be okay in that instance. Thanks for watching!