Section 179 Deduction // Vehicle Tax Deduction // How to Write Off a Car
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- เผยแพร่เมื่อ 30 ก.ค. 2024
- Are you a small business owner interested in learning about Section 179 for a vehicle tax deduction? Have you ever wondered how to write off a car? In this video I explain section 179 of the IRS Tax Code. This is basically an incentive from the government to small business owners to invest in themselves and their business by purchasing certain qualified equipment, passenger vehicles, and many other qualified items.
In a nutshell, instead of depreciating certain purchases over several years, Section 179 allows business owners to depreciate 100% of the purchase in the current year in which you purchased the vehicle and placed it into service.
Additional resource for you to learn more about Section 179... www.section179.org/property_t...
IRS Publication 946: www.irs.gov/pub/irs-pdf/p946.pdf
IRS Publication 463: www.irs.gov/pub/irs-pdf/p463.pdf
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I've been involved in people's financial decisions for 15+ years (7 yrs Real Estate experience & 8+ yrs as a former Financial Advisor)...I now bring the financial successes, mistakes, failures, and best financial habits/tips to you through these videos.
My mission is to bring Financial Awareness to the forefront of your daily decisions so you can: improve your quality of life, increase your net worth, and grow upon your financial literacy. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, entrepreneur, and of course...my experience as a Former Financial Advisor.
This channel allows me to share my passion for personal finance, stock market investing, real estate investing, and entrepreneurship. I produce content that I would want to watch, and because of that, I give 100% effort in every video that I make. I also believe in complete transparency and open communication with my audience.
Subscribe if you are interested in:
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DISCLAIMER: I am not a financial adviser or a certified public accountant. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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MORE Self Employed Tax Return TIPS: th-cam.com/video/TOpklhcGJ1o/w-d-xo.html
10 Self Employed Tax Deductions/Credits: th-cam.com/video/xz3N9wXPcxc/w-d-xo.html
Standard Mileage Rate VS Actual Vehicle Expenses: th-cam.com/video/RwlvJOhnF2U/w-d-xo.html
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@Seth Kardos - Appreciate that feedback, man! Thank you. Let me know if any questions pop up...happy to help however I can.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
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It’s important to realize that you still need sufficient income/revenue to offset the tax deduction. Buying an expensive vehicle just to get a tax deduction isn’t a prudent move. In this economic environment, cash flow is especially critical and cash will be king for the foreseeable future.
Mike Wong - Very well said. Appreciate you sharing your thoughts. I may not have emphasized that sufficiently in the video, but I might have mentioned something to that degree. Hope many of the small business owners out there will be able to make it through these challenging times.
Thus, finance the car and take advantage of 179 deduction.
@@Joshuatree7746 in order to qualify for the sec 179 expense your vehicle must weigh more than 6000 pounds. If your vehicle qualifies then you still need sufficient revenue to offset the higher deduction and hence my previous point.
Could you please elaborate further on this? I am interested to understand the parameters more efficiently. Thanks
@@mikewong5888 🤔so in another word the business would need to make a certain amount of income to get the deduction, if not it would consider a refund, which I'm sure won't happen. Iam I right?
Your really good at this, broadcasting or radio is your calling!!! Your transition, your introduction, your voice, your look. You could easily do broadcasting!
@Rabbit TheUnicorn - Hahaha...thanks! Those jobs are pretty tough and I'm blessed to be able to edit prior to making a video public/published...you should see the b-roll and outtakes...lol. Appreciate you taking the time to watch this video...hope there are others on the channel that help you find a financial nugget or two. Cheers, boss lady!
The background for the outro looks so good!
Jaidan Craig - Investing Made Simple - 👍🏻👍🏻
This video provides a clear explanation of vehicle tax deductions, particularly Section 179. Understanding these deductions can help maximize tax benefits for business owners. Thanks for the informative breakdown!
Your intro is funny and good! 😆 what a hook lol great content thanks for the into
Thank you! I had fun painting the studio and making this video…def helped make for a good intro/hook. Lol
Thank you for explaining in clear talk and using images
@Xavier Crenshaw - My pleasure! Glad you enjoyed them...will try to incorporate more of that in future videos. I, myself, am a visual-learner...so I try to help make things visual when editing. Happy New Year to you and your loved ones...cheers!
Hi K just saw your videos. Good info! Keep up the good efforts!!!☝👍💃😳😁💥
Thank you!
Great helpful video as usual
Google User - Thank you for the feedback! Appreciate the positive encouragement.
Very useful information. thank you a lot!
@billy kelly - Thanks for that feedback! Appreciate you for taking the time to watch the video. If you ever have suggestions regarding different financial-related videos you’d like to watch please let me know. Cheers!
Well done! Thank you!
Joshua Martinez - Thanks man! 👍🏻👍🏻
Awesome video. I always wandered about the cars and being used for business. Is there anyway a car can be tax deductible from an internet business?
Wise Cents - Yes. Your CPA can give you the specifics, but be careful if it is your only car because if you only have one you’ll need to get organized and track how many miles driven are for personal / business and only business related is deductible. Also, can you advertise “Wise Cents” on your vehicle with a magnet sign the same way Realtors do? Again, you can get creative, but make sure you understand the specifics from your CPA and keep documentation of everything. Everything! The more organized the better. 👍🏻
I know this video is 2 years old but I was reading this years section 179 and it differentiates non "work" vehicles by (passenger vehicles, trucks, and vans) and ( SUVs and Crossovers). Limited at $11,560 for trucks with beds under 6 feet. But limits SUVs at $25,000 if they weigh over 6,000lbs. My question is if I'm purchasing a crew cab, short bed truck (weighs over 6,000lbs but bed length is under 6ft). Am i limited to $11,560 or $25,000?
thanks for the video very helpful, have a question if I have 2 vehicles and use both for business, can I use different methods for deduction 1st one with standard milage and the second one with actual expenses with depreciation and using the 179 section. thanks
Hello sir, if I personally purchase a used vehicle above 6000 pounds this month, and use it 100% for car rentals, would I be able to get the full price of the vehicle refunded on my taxes for the 2021 year?
great video! IF im a full time real estate investor, can i fully write of (accelerated depreciation) a bmw X6 since it weighs over
6k pounds?
Thanks for making this video bro.
@Cody Thrive - Appreciate you...thanks boss! Cheers!
With the bonus depreciation, it doesnt matter rather is light vehicle or heavy vehicle right? for example i have 60000 taxable income, if i buy a 40000 car under 6000lbs i can write that off in my taxable income, please let me know if i am missing something, thanks!
You gave the example of a model X for $150k being able to write off the full amount through 179, is this full $150k write off still applicable if you have an auto loan (not a lease) to purchase the vehicle?
How much is making "a little bit of money"? I'm a part time seller on Ebay, would I be able to take advantage of Section 179 for a vehicle?
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?
Great videos buddy, got a quick question my income before taxes was around 160,000 I purchased a dump truck F350 Finance through the bank pay payments every month do I qualify? Also do I specify as the total dollar amount paid or just a finance payment every month
@RICO S - What’s up, Rico! Man, congrats on your gross revenue …awesome!
I can tell you the F-350 is an eligible vehicle for work/business use…but are you a W-2 or do you own the business? I’m assuming you own the business and/or are self employed…if that is true then yes you qualify for these tax deductions / write offs.
Regarding what you write off, my best response would be to work with a CPA and discuss what’s the best way to write off the vehicle. Most business owners write off the entire purchase price through bonus depreciation and then simply use “actual expenses” of the vehicle from there on out. Don’t think you can write off the entire vehicle price in year one AND then still write off vehicle payments in future years….I think you’re only limited to the interest on each of those payments for future years and not the entire payment. Again, a CPA can def answer your questions with more confidence.
Hope some of that was helpful. Appreciate how busy you probably are and still took the time to watch the video - so thank you! Happy to have you as part of the channel. Cheers boss man!
@@Financial_Awareness thanks so much, i will continue to keep watching your videos and tell my friends
Great video
@JuanCarlos - Thank you, sir! I’ve got two daughters…looks like you have a little cutie-pie too…they grow up fast! Enjoy the ride & memories along the way.
Hi, just to be clear, as long as my business is making over $25,000 and I want to purchase a passenger Mercedes Sprinter for let's say $100,000 , does the full purchase get a write off the first year or just the financed payments for that year? Thank you
@Tiyuna Brown- Hi there! Appreciate you taking the time to invest in your knowledge on this topic...strongly encourage you to continue your research so you can fully understand certain business decisions and the tax implications of them. To address your question, no, you cannot utilize section 179 to generate a loss...so if your business only generated $25k then that’s the max you’d be able to write off in year one (bummer I know). However, if you have the time and attention span for more videos of my ugly mug (lol) then check out my other self employed vids...the one about section 179 vs standard mileage deduction...if you plan on driving your sprinter van quite a bit then you may benefit from the yearly write off/deduction of the mileage over the actual expense method of deducting your vehicle expenses.
Sorry if that’s not what you wanted to hear, but hope it helps you on your journey. Keep it up! Appreciate you. Cheers to you boss lady! 😃
Hello, awesome video, i have a question if i purchase a car in 2021 but the car wont arrive till 2022, does this work or do we have to use the vehicle within the same year?
@Banana Roll - Solid question. A CPA can confirm, but the way I read your question my answer would be that this would be for 2022 and not 2021. I'm assuming you only have put down a down payment of some sort, but won't actually sign paperwork and take possession of the vehicle until 2022....that's my thought process. Let me know if I've misunderstood. Just out of curiosity, how does someone buy a car & sign all the necessary paperwork & registration without actually taking ownership of the vehicle?
For example, in the new homebuilding industry, you sign a purchase agreement, but don't actually close on the home and take possession until it is completed and you sign closing documents. Hope that is a fair analogy. Thanks for checking out some videos on the channel...really appreciate you taking the time.
So I made over $150k from my W2 position and about $10k from my LLC. If I start financing the Veichle this month can I sti write off the entire purchase price or just the amount I pay in actual expenses for the rest of this year?? Just trying to decide if I should pay it out in total or finance and keep more money in my pocket
@darkshodow - Congrats on $150k from w2...solid annual income! The unfortunate aspect I see from the little info I can gather from your question...the amount you can write off is limited to the $10k from your LLC....can't write off against your W-2 earned income. With that said, I doubt you'll want to / can write off the entire vehicle purchase in year one....you'll want to stretch that out over time.
Had you earned like $50k from your business then you'd likely be able to write off more than just $10k, but that doesn't seem like an option...because you cannot use Section 179 to generate a loss. Alternatively, you could use the mileage deduction method...check out that other video on my channel...I think it is also linked in the description/pinned comment of this one. Hey, appreciate you taking the time to check out this video and invest in your knowledge!
What if in year 1, the 179 auto didn’t let me write it all off, it has a carryover due to income was low last year, but then what about the rest of the balance? Truck was $50,000 they allowed $8000 deduction with $4000 carry over. But what about the 42,000
I love this guy
@Dr.Blast__27 - Thanks doc! Appreciate you, sir. Cheers!
@K. Scholl- I have a question. I Have a LLC and a self employment (1099) for another company. I run both. I already bought a vehicle for my LLC- this year I was thinking of buying a SUV for my 1099 business since I have to see clients. I have a 3rd car for my personal use. I log my miles for each type of use. Is it justifiable to have two vehicles for two different types of businesses? Thanks
@Mohinder Singh - Hey Mo! Yes, if you feel as if there is a need to have a vehicle per company then yes it can be justified. All I’ll share & add is for you to be careful not to take advantage of this benefit just for the sake of the write off…it is still a net cost to your business/company vs running more lean and making due with what ya got.
Congrats on all your efforts though! Clearly you’re doing well enough to be thinking about these options. Well done.
Appreciate you taking the time to check out this video and being part of the channel. Cheers!
First of all, thank you for the information and I know have some more knowledge before speaking to a CPA. Had a question though; as an LLC who will generate $250-200k in sales/profits before tax this year, I was looking into using section 179 for a 100% use of a Tesla Model X($65-90~k cost).
If I take ownership of vehicle in November-December and use it 100% for business, how does the actual car get written off 100%?
Come tax time and guesstimating I'll owe $60-30k in income tax, how will the car actually get written off where I will not owe any money on the vehicle come Jan 2022? Thank you again; just a bit confused on how the car actually becomes 'free' to the business owner
@Be G - So the vehicle isn’t free…you def still have to pay for it. The value/benefit will sound like this…
If we use $200k as gross revenue and your business related vehicle purchase is $75k then you’re able to write off that $75k against your gross revenue (along with other business related write-offs as well, but let’s just use the vehicle in this example)…this would bring your gross revenue down to $125k. Therefore, you’re only getting taxed as if you made $125k instead of $200k. Assuming you’re single then anything above $164,925 is taxed at 32% vs 24% between $86k and $164,925…creating a tax savings of $20,806 (which is a blended amount due to two different tax brackets in this example). Said another way, buying your business vehicle for $75k saved you $20,806 in taxes. You still have to pay for the $75k vehicle, but the purchase reduced your tax burden.
You’ll then be able to write off other vehicle expenses each year (just not as much as including the purchase in year one).
Let me know if those numbers made sense or if you still have questions. Will help if I can. Cheers boss! Congrats on a great year of revenue for your business! 👍🏻👍🏻
@@Financial_Awareness
Wow! Thank you, no other channel has explained this the way you did. I want to genuinely thank you, going full time in my small business this year taught me I'm good at selling but not the most financially literate with tax exemptions etc. So your education and channel really is a life saver for me and my family. Thank you again and subbed.
Yes, this was much more understandable for me. So once the vehicle is written off against my income this year; which will save me alot in taxes.
What can I, if any, write off from the car for the following years?
In 2022, will I be able to write off the Monthly Finance payment, insurance, maintenance, garage fee etc?
@Be G - Correct, you’ll be able to write off those things you mentioned and I go over a whole list in the video I believe. If I don’t go over it in this one I do it in the other. Link to the other video is in the description to this one.
@@Financial_Awareness thank you again! Will continue watching
@@Financial_Awareness thank you for breaking this down. YT needs a dumb down explanation of this. Everybody things the car is free. Please make one!
Amazing video my friend! I am an ecom brand owner, and mainly work from home. I just bought an SUV that weighs 7k. Can I take advantage of this write off if I mainly work from home? I am using the car about 40-50% for business. Or would you say this is a flag and can cause some issues with the IRS down the road?
Artur Istrate - Thank you for your feedback! Glad you enjoyed the video. In order to take advantage of this accelerated depreciate you have to use the vehicle 50% of the time at a minimum...so if you're 40% - 50% that may mean you can't take advantage of it. If you take a finer, detailed look at your driving and potential driving and if you could be at 50% or greater then yes, you can take advantage of section 179 for your ecom business. Additionally, shameless plug here, but I did a follow up video on this very same topic that may be of interest to you as well (th-cam.com/video/RwlvJOhnF2U/w-d-xo.html)...I'm unaware of the revenue of your ecom business so just be aware that you cannot use Section 179 to generate a loss...and if you are using it to "show $0 profit" then that could be a flag. My CPA has instructed me in years past to at least show some income and not to show losses in consecutive years. A quality CPA in your area could shed a little more detailed light on your specific situation. Would personally like to invite you to subscribe as well if you haven't already. Thanks! Appreciate you...let me know if I can help any further.
@@Financial_Awareness quick question on this and thank you for putting out the video and providing so many answers. Let's say yo don't create enough tax liability via the business (aka < $25k) - say a gig economy driver or delivery/courier starting out. Does Section 179 allow you to continue to take this deduction over multiple years until you eventually create enough tax liability to the purchase price of the car?
ex. If i buy a $100k vehicle, use it 50% of the time, and I create 10k of taxable liability with the business per year- can I take the 10k deduction for 5 years? Thank you in advance for your thoughts and feedback.
@@richiroproductions8262 - Bingo - you hit the nail on the head there boss. Most folks love the accelerated depreciation allowed in year 1, but if you wanted to break the depreciation down over 5 years as you mentioned that is allowed. The only thing you'd want to clarify with your CPA is the matter of only using a $100k vehicle for 50% of the time...which would mean you could only write off $50k over that 5 year period...if your situation changes and you end up using your vehicle for 100% business use in a future year - then working with your CPA each year to get your figures correct/accurate would prove to be beneficial.
Hey, appreciate you taking the time to ask your question and checking out this video & the channel. Cheers boss!
I was thinking of getting a 2012-2015 hybrid vehicle for rideshares (100% business) and using 179.
How is income from ridesharing?
Is it possible to write off the use of a leased vehicle? What if I owned a vehicle and my mom worked for me part time, would I be able to buy her a company vehicle and claim it belongs to my s corp? Love your content!
@MollyTheUkulele - Write off the use of a leased vehicle = yes that is allowed. Buying the company vehicle and allowing a 1099 subcontractor to use it...yes, I do believe you can do that. Love the question...thanks for the good vibes...just double check with a good CPA in your area before moving forward with the next steps from here. Cheers!
Hello
My car flooded last year .
I bought a new car. Can I write it off ? I use it for work and independent contractor
@AFRICAN WEDDING TV LIVE - Oh my goodness! I’m so sorry to hear your car flooded…terrible. Yes you can write some/all of it off and if you have the time I would recommend working with a CPA to confirm you get all the best write offs possible for your situation.
Hey, thanks for checking out this video and being part of the channel…cheers boss!
I’ve been researching this topic but I haven’t quite got my answer. So if I finance a vehicle am I able to get that amount of money back from the vehicle when I file taxes? The way that’s it been explained is if you buy a vehicle that you can write off 100% for say, $43,000.00 dollars. Will o revive $43,000.00 back on my taxes?
@Louis Robinson - LOL! I’m not laughing at you...I’m laughing at whoever told you that. The answer to your question is, “no, you do not get $43k back.”
A vehicle write off is not the same thing as a tax credit. When you write off your vehicle through section 179, it reduces your business revenue because it is viewed by the IRS as you reinvesting back into growing your business...just imagine all the auto manufacturer lobbyists that worked hard to get section 179 approved to help stimulate the purchase of automobiles. So if you make $100,000 and purchase a $25,000 vehicle (could be new or used...just has to be new to you) then your revenue goes down to $75,000, thus, lowering your taxable income, thus lowering your tax bill.
If you want to learn more about the different vehicle deductions and which one is best for you...check out either of my two follow up videos I did on this topic...both can be found within my “Self Employed” playlist...along with information regarding tax credits for the 2020 tax year - which people are utilizing now for the taxes they are filing for last year. Hope all that helps, boss!
Appreciate you for taking the time to check out the channel! Cheers!
i own a single member llc and i am looking to purchase a truck for 100% business use. does the truck need to be purchased by the business or can i purchase the vehicle personally.
Shane Heim - Such a great question! Thank you for asking. No sir, you do not 'need' to purchase the truck through your business. You may purchase it personally, but there are some tradeoffs to consider & you'll want to confirm them with your CPA. Purchasing it through your personal name will likely result in a smaller insurance premium compared to the vehicle being registered under your LLC, but this opens up some of your personal assets to liability (potentially - in the event of an accident)....you can call your auto insurance company first and ask them to run premium quotes for you based on both scenarios to confirm if there is a difference. Purchasing it through your business will obviously increase the value of your business since it'll be owned by the business - so if you plan on selling your business soon/eventually during the lifetime of this vehicle you'll want to consider that.
It's kind of a numbers game from an accounting perspective.....You can choose to expense business mileage (standard mileage rate) or business related expenses (actual expenses), but not both...because most vehicles are economical to operate, most people use business mileage driven (standard mileage rate) as it tends to be a larger write off number compared to actual expenses. However, all that said, one of the biggest benefits of the 'actual expense' accounting method is vehicle depreciation....you can depreciate or even get bonus depreciation for the vehicle purchase depending on the truck you purchase. Again, it's kind of a numbers game. So, yes you can purchase it in your personal name, but if you want to maximize depreciation from the purchase & use of the vehicle you'll want to run the numbers based on the accounting method you choose and see which will make the most sense for you. Sorry for the lengthy response! I think it's great you are researching your options and encourage you to continue learning so you make the best decision. Hope all that helps a little.
In looking to start my own pressure washing business, should i register My LLC first, then buy all the equipment so i can get that money back? Also, I'll be using my own personal car, do i qualify for any deductions here or am i just going to have to take the fact I'm using my own vehicle on the chin? Since I'll be investing in s tow package as well as putting miles on it etc?
AllThingsPixel - You can use the standard mileage deduction. (I’ve got a couple videos on that topic if you scroll on the videos page or self employed playlist). Congrats on starting up that business! ...and I appreciate you taking the time to check out the video! Cheers boss!
@@Financial_Awareness thanks so much for the reply, shall i wait on buying the equipment until after I've registered the LLC to be eligible for some kind of deduction for the machinery?
@AllThingsPixel - If you plan on purchasing with a new company/LLC debit/credit card then yes...if you’ll just purchase with your existing cards and save receipts then I don’t think it matters.
When recapturing deprecation on a vehicle that was traded in, your recapture amount (the amount your posting taxes on) is the traded in value and not the full baths amount correct? Also is it taxed at Capitol gains or ordinary income?
@Ken Kauzens - It is my understanding that you’re taxed at your ordinary income tax rate, up to a maximum of 25%. Yes, the amount of the trade-in value (the amount you were actually given for your vehicle) is the correct amount to use in this example (assuming the vehicle was 100% written off by the time the trade in occurred.
Hey, thanks for checking out this video and being part of the channel. Cheers!
@@Financial_Awareness thanks for the reply and reading thru the autocorrect!!!!!
@Ken Kauzens - 😂😂😂 when I noticed the typo and saw that the comment wasn’t edited I just figured it was a mistake. Haha!
Will be nice when Twitter gets an edit button. Lol
If I used section 179 this year (for a $25,000 deduction of $43,000 Toyota Tundra short bed,) and sell my business next year, and plan to keep said vehicle after the sale, do I have to pay the section 179 deduction back?
Mike Murphy - Great question and appreciate you taking the time to watch the video. Best course of action for you is to consult with a CPA in your area to confirm. That said, my short answer to your question is “no” but you should map it out and plan your course of action. Prob want to consider owning this vehicle in the name of your business...and when negotiating the value of your business later down the road, just be sure not to include it in the valuation. Additionally, one work around to avoid the Section 179 Depreciation Recapture issue (again, confirm this with your CPA 😉) is to have the business sell the vehicle to your spouse for the lower depreciated value of the vehicle so the business won’t have to worry about owing any capital gains on that vehicle sale and then you/your spouse will own the vehicle with clear title and business won’t have to worry about any tax issues. If you already own the vehicle in your personal name and want to strategize your options - again I’d suggest a qualified CPA to answer that for you (which is my “cya” response). What do you think? Was that a little helpful? A buddy of mine was in this exact situation and selling his vehicle to his wife was how he “worked the system” so to speak. If I hear/learn otherwise then I’ll reply again to my response.
@@Financial_Awareness that is great advice. Thank you!
Mike Murphy - my pleasure man! Shameless plug here...have you seen my other video about Standard Mileage Rate Deduction vs Actual Expenses? ...it’s kinda a follow up to this one.
Hi. Great video. I'm sole proprietor(landlord) had a 2003 Toyota Landcruiser which I gifted to my son early this year. The car title is under my son's name. After I viewed your video which saying that I can use section 179 to reduce taxable income. In order to use section 179, can I have my son sell the Landcruiser back to me at market price? You specifically mention the used vehicle must be new to me even though I used to owned it but buy it back from my son. Please advise. Thank you much.
@danny nim - Sounds like it makes sense to me! Yes, the vehicle does not have to be brand new...just new to you. If the vehicle isn't titled to you currently, then it doesn't belong to you and would then be 'new to you' if you purchased it. I do like to qualify many of my tax-related responses with 'please reach out to a local CPA in your area to confirm' which applies to this response as well, but I do not see why your description wouldn't work as you described the scenario. Man, Toyota makes a great product of an 18 year old car is still worth owning....awesome! Appreciate you taking the time to research...I've got another 'vehicle tax deduction' vid that you may be interested in because I go over Section 179 vs taking the standard mileage rate deduction...would be good for you to know your options between these two. Thanks!
@@Financial_Awareness Thank you very much. Your videos greatly help me and million landlords in the country. Please stay safe.
What if I'm reporting loss this coming year would I still qualify? If so, how do I get the credit back?
@BaseballDad1323 - No, sir, it won’t work for you this year. Cannot use Section 179 if you’re already reporting a loss. You need to have positive revenue that you can “deduct” the vehicle purchase and expenses against in order for this to be of value to you.
Thanks for your great videos? Does the car have to be in the business name or not?
@Punch Maleka - Thanks! No, the vehicle does not need to be in the name of the business. Good idea to run any vehicle deduction/write off questions by a CPA to make sure you are accounting for your deduction correctly. Thanks for taking the time to check out this video and invest in your knowledge...keep it up! Cheers boss!
awesome video, does this still work for 2021? and can you purchase more than one car for this benefit?
@Banana Roll - Yes & Yes. Thanks for the feedback and I appreciate you checking out the video. Cheers!
@@Financial_Awareness Thank you for the response, each car over 6000 will have the 25000 deduction or the total for the year is 25000? Many thanks
@Banana Roll - Total Section 179 deduction allowance for 2021 is $1,050,000...Yes, $25k per vehicle for Section 179 as you mentioned above for heavy vehicles, but then you could do additional bonus depreciation on top of that $25k.
Here's a link to an article from Balboa Capital (no affiliation) that might help: www.balboacapital.com/section-179-vehicles/
Appreciate you, boss!
I just started a small construction company this year. Could you do a video on deducting all the tools,equipment and truck that I already owned when I started the business? Thanks!
wilsonatore - Would be happy to...congrats on starting your new company! Hope you continue to find good business and grow your revenue.
I used Sec 179 deduction for an SUV I purchased in cash for my LLC. However, I am now operating as a Sole Prop. Will I owe the depreciation recapture since I shut down the LLC?
@Jignesh Shah - A CPA could confirm with more certainty, but if you were a single member LLC then I don’t think you will owe dep recap…because you still own the vehicle yourself as a sole prop. Additionally, if there was no transaction or sale then there’s nothing to report just yet despite you “shutting down the llc.” Because you used section 179/actual expenses in the first year you’ll have to stick with that depreciation method moving forward - as I believe you can only switch from one to the other if you started with standard mileage in year one. I’m not 100% confident in my response about the possibility of needing to pay dep recap from going from LLC to Sole Prop…so please make sure to confirm with a CPA and don’t just take my assumption/response as being 100% correct.
Hey though, I do appreciate you taking the time to check out this video and being part of the channel…hopefully there are a few other vids within my content library that are also of interest to you. Cheers boss! Let me know what you find out.
@@Financial_Awareness Makes sense. Awesome content on this channel. Thanks so much!
Can you write off the full amount in one year if your business generates the proper revenue then convert to standard mileage deduction on the same vehicle the following year?
@TJ E. - Nope. IRS does not allow for this. If you start off with standard mileage you are allowed to switch over to actual expenses in future years. If you start off with actual expenses/Section 179 in year one you need to stick with that one.
Thanks for checking out this video and being part of the channel. Cheers!
Does the vehicle have to be in the business name? I have an LLC but then only employee currently.
@Sarah Dell - The vehicle doesn’t have to be in the name of your business in order to take advantage of the write off. Some people choose to do it that way and some do not.
Hi Sir, thank you for your video. I have a few questions, I received my sole proprietorship June of 2020, purchased a vehicle for about 20k regular hyundai sedan, preowned in July 2020. I use it for door dash & a little bit for my clothing business (photoshoots, purchasing new inventory etc.) I plan on getting my llc soon, do you think there any potential deductions I could receive? Thanks!
Fatou Ndiaye - Hi! Thank you for taking the time to watch this video. Appreciate you for that. To answer your question, yes, you may take advantage of Section 179 for the vehicle purchase. Just keep in mind two things - the year you buy the vehicle and place it in service (2020 for you) you’ll have to decide whether or not to use the standard mileage rate accounting method to get your vehicle tax write off OR to use “actual expenses” (which will predominantly be vehicle purchase accelerated depreciation for you...check out my other video on this topic...because it just might be more worth it for you to take mileage deduction. Let me know what you think! Appreciate you & would love for you to subscribe if you haven’t already. Thanks! 😃👍🏻👍🏻
@@Financial_Awareness if we choose to use the standard mileage rate accounting method, could we add some expenses like gas, oil change and tires expenses? or we just limited to mileage?
@billy kelly - Short answer = no. Once you select the mileage deduction you’re committed to that accounting method. However, that may not be a bad thing...the accelerated depreciation is very nice, but it is possible in many situations that you actually get better/more deductible write offs over time by using mileage. Just depends on your situation and how you plan to use the vehicle. Check out the other video regarding standard mileage vs actual expenses...I go into more depth in that video and you may be more clear on which direction you’d like to go for your situation. Appreciate you, Billy!
@@Financial_Awareness thank you so much for the clarification.
Did you get a write-off for turning that room gray-blue?
@rudestrudedog - I'm going to speak with my CPA about that. Because this particular square footage of our home is 100% dedicated to filming/editing my TH-cam videos I believe I can legitimately write it off as home office/business use...because it isn't the same as using your kitchen table for emails...it's 100% "for business use". ...or at least the costs incurred to buy the equipment and set up my studio. However, I need to brush up on my home office deduction knowledge - because I haven't ever had this situation before. Additionally, my channel did not get monetized until early Jan 2021, so in 2020 I had $0 in revenue from this new endeavor...so whatever write-offs I get will make me have a negative year in 'year 1' and then for 2021 I'll show profit. (that's the plan at least) Hey, appreciate you taking the time to watch this video - thanks! Hope there are others of interest to you. Cheers!
does a audi etron gt qualify? since its a sedan but an EV that weighs alot?
@javier bocanegra - I just googled that vehicle and the Gross Vehicle Weight Rating (gvwr) is over 6,200 lbs….so yeah, that would work IMO. Double check me by running that question by a CPA before you consider your purchase, but I would think that would work. Obvious to state this, but….don’t just blow money on an expensive vehicle for the write off. Most vehicles depreciate in value and I would not suggest wasting money for the sole purpose of getting the deduction.
Hey, thanks for checking out this video and the channel! Really appreciate you taking the time. I have a couple other vehicle deduction vids that you might like. Happy new year! Cheers, boss man!
Hi I just talk to hr block, the lady confused me... If I buy a car over 6,000 pounds I'm a sole proprietorship, say I paid $80k, & don't owe the irs and I use 179 accelerated depreciation within the first year, when I file my taxes will I get the full 80k back returned into my account?
@Candace M Smith - No ma'am, you will not get the $80k back into your account when you file your taxes.
As an example.....As a Sole Prop. if you only made $40k then you cannot write off 100% of the $80k vehicle purchase because you only have $40k of revenue that you can write off. You cannot use Section 179 to generate a loss. You have to have more than $80k of revenue AND the vehicle would need to be 100% for business use in order to write off the entire vehicle. I mention that because most Sole Prop's drive one vehicle and they use it for business and personal use....so you wouldn't be able to legitimately write off 100% of the vehicle. I've got another video comparing Actual Expenses through Section 179 to taking the standard mileage rate as your vehicle deduction....if you have the time then go check that out. Thanks for checking out the vid and channel! Cheers boss lady!
@@Financial_Awareness I had a similar question. In this example I made more than the 80k for the vehicle and its 100% business use. Will my return be the full 80k or is it 80k x tax rate (25%) for roughly a 21k return? Spending 80k to save 21k in taxes is counter-productive.
Do I have to pay cash for the vehicle? Can I lease the vehicle and still qualify
@Chris C - You can pay cash, lease, or finance. If you lease then you obviously cannot write off the purchase price since you’re not owning the vehicle, but lease payments would be your form of write off in that scenario.
Appreciate you taking the time to check out the video...you might like my other vehicle tax deduction vids to round out this decision you have. Thanks boss!
Hello I am a 1099 contract worker, can I still take advantage of the section 179 deduction?
@Peri Narayanan - Absolutely.
Can u answered me they said I claimed business vehicles but I registered as personal car. So now they say only personal vehicles was quality for the tax deduction and not business vehicles. So how should I register vehicles as.
@Rock&Roll - Hey there...sorry I missed your comment a few weeks ago...playing a little catch up today. Give a local CPA a call and maybe meet up to talk with someone so you can explain more. I haven't heard of people not being able to write off expenses or mileage based on vehicles being registered in personal name. If they are registered as an asset owned by your business then it would coincide with your business revenue/expenses...shouldn't be an issue. Like I said though...this is a great question for a local CPA in your area to get dialed in on the specifics of how you've structured your cash flows and business/personal checking accounts.
Thanks for checking out the video / channel...appreciate you taking the time. Cheers!
Hello sir if my business was only started in March 2020, will I still be eligible for the deduction if I buy a vehicle for business? Also the vehicle is lesser than 6000lb. Thank you!
Ash03 - Hello & CONGRATS on starting your new endeavor...hope 2021 and beyond present you with much prosperity as you tackle each new challenge that comes your way. To answer your question, YES, you may still write off a vehicle that is under 6,000 lbs of a Gross Vehicle Weight Rating...you are just limited to $18,100. Make sure you keep in mind the percent you use the vehicle for business use as well as the fact that you cannot write off the purchase to generate a business loss. Hope that helps! Would love for you to subscribe and follow for upcoming videos and a few I've made already that could help you. What industry is your business in?
Started a sneaker, clothing and accessories reselling business. A lot of my customers are local and I’d have to drive to deliver stuff to them. Thank you so much for the fast reply, definitely subscribed and followed!! Appreciate it a lot!
Ash03 - Wow! That is really amazing - congrats! Yeah, sounds like a lot of driving to me...so be sure to track all those miles if you decide to go that route. Shameless plug here, but I did another video regarding this topic as well...taking the Standard Mileage Rate Deduction vs Actual Expenses. Check out that video because depending on your situation it may be worth it to take the vehicle purchase write off (actual expenses) OR not writing off the vehicle and getting the mileage write off every year....just a thought.
@@Financial_Awareness oh wow thank you so much! I’ll check the video out, will definitely need all the help and info that I can get and I’m sure this video will help a lot!
@@kkiiization - Cool...thanks! Let me know if you have any other questions or if there are any other video topics you'd like to watch a video on. Appreciate you! Best of luck on your continued success....keep up the hustle...the juice is worth the squeeze.
if you dont mind me asking where did you learn all this ? should i go to buisness school or law school?
@Coy Mills - I'll be 40 this year big hoss...been 20+ years of reading books, going to school, learning, etc...and I still know very little...so much more to learn.
I was 'that dork' that read Rich Dad Poor Dad in high school and learned about Dave Ramsey during college. I was a Finance & Real Estate double major...then worked in real estate for 7+ years and was a Financial Advisor for 8+ years...(a person that actually went to college and then applied their degree in the field in which they studied...shocking I know...LOL).....pretty sure most of this is noted on my 'about' page....so feel welcome to scroll over to that one.
...but I also learn from watching other people's YT videos and continue to learn new things. That's the bottom line...try to learn all the basics quickly, but you have your whole life to continuously be learning new things about personal finances and how you can interwork your own personal financial behaviors / habits into having a successful thought process when it comes to your own finances.
How do you write off a building, if real estate isn’t allowed? Also, can you use it for new purchases every year? Or does it have to be the first year of a new business?
@Dipper964 - Yeah, real property (real estate/buildings) isn’t included in section 179 and they have their own depreciation schedule and write offs...to answer your other questions, yes, it’s for née purchases each year and yes, you do have to select section 179 in the first year in which you begin using the vehicle/equipment. Hope all that helps & thanks for checking out this video...hope there are a few others within my content library that are of interest to you. Cheers boss!
@@Financial_Awareness ahh ok, I was under the impression that you have a year to buy everything after opening a new business.
Can you get an new suv and write it off every year?
@Dipper964 - Yes, you can write off a new vehicle purchase every year if you want. ...and it’s not just the “first year of your business” that you have to buy everything, it’s ongoing. Several small businesses owners will meet with their CPA to discuss end of the year numbers around November and they might purchase new equipment in December, before calendar year ends, to buy something big and write it off to offset larger profits. Does that help a little more?
@@Financial_Awareness yes, it helps immensely. I appreciate it. Thank you
so does this mean if i were to lease a car i have a budget of 25k yearly if it weighs over 6,000 pounds? meaning the lease payments can be 2,000 a month?
Calvert J - Yes, you are correct. However, just because you can doesn’t mean you should...make sure it’s a smart purchase for your business and not to just spend to get the deduction. Also, keep in mind if there expenses that you may incur while owning and operating this vehicle for your business. Lastly, if you drive this vehicle say 50% for business then you could only write off 50% of the lease payment. Just be mindful of stuff like that. Let me know if you have more questions and would love for you to subscribe if you haven’t already. Appreciate you. Thanks! 👍🏻👍🏻
@@Financial_Awareness thanks 🙏. will definitely subscribe
Appreciate it, sir! If there is anything financial-related in particular you’d like to watch in video format please let me know. 👍🏻👍🏻
@@Financial_Awareness so with that statement, this car could be a Lamborghini urus since it weighs over 6000 pounds, as long as your not at a loss ?
@New Fone - According to a quick Google search that vehicle has a curb weight of less than 6,000 lbs (4,844 lbs according to Google results). if you can justify to yourself in the mirror / your CPA / the IRS that a Lamborghini is a legitimate “business use” vehicle then you could use the bonus depreciation to help with the deduction. Consult with your CPA for their perspective and advice. I’ve seen some creative ideas on how to write off a high-end luxury vehicle…consulting with a CPA is your best bet on how to do it correctly. Appreciate you taking the time to check out the video. Cheers!
So in a sense, I can write off my car since I use it 24/7 for private security and I also do doordash/ instacart/ and Uber?
@Albert The Artist - Initial reaction: nope, can’t do that. I presume “private security” & “doordash” & “Uber” are three separate 1099 revenue streams…and if that’s the case I’m not sure if you can write off vehicle expenses for one vehicle for multiple businesses that you operate…3 in this example. I know because I tried myself this past tax season 😂😆🤪. Also, if this is your only vehicle then you’re lying to yourself if you think it’s never driven for personal use…so you wouldn’t / shouldn’t try to write off 100% of expenses…maybe 60%-80% 🤷🏼♂️.
However, if you’re talking mileage and not vehicle expenses…then it’s possible you could be correct…just not 100% of all mileage driven. Run that question by a CPA, but that’s my response. Hope that helps!
Hey, thanks for checking out this video and being part of the channel. Cheers!
@@Financial_Awareness very very helpful I appreciate you🔥🙌🏾
I’m in h1b visa and can still take advantage of this section 179
Pappu Note - Hello! Hope you are well. Thank you for commenting and watching the video. I do not see a question in your remark. Are you asking “if” you can take advantage of section 179 or are you stating that you can?
If you have an H1-B visa and are earning a wage for the entire taxable year within the United States then you do need to file your taxes (Form 1040) and yes, you should still be able to benefit from Section 179 of the IRS tax code if your business purchases qualify based on normal Section 179 rules / eligibility. You will want to confirm this with a local CPA in your area, but it is my understanding that you’re still able to do it.
Let me know if you have more questions & please feel welcome to subscribe and check out a few other videos if you like. Thanks! Appreciate you. 👍🏻👍🏻
So if I decide to use section 179 depreciation and bonus depreciation on a vehicle to write off the entire vehicle value, does that mean in the future years I can't deduct mileage or maintenance from that same vehicle?
@Chris Garay - It means in future years you are not able to deduct mileage, but you would be able to still deduct vehicle expenses as long as you are still using the vehicle for a minimum of 50% business use. I actually have done two follow up videos to this one that are more helpful in guiding you towards which method of accounting / vehicle deduction is best for your scenario...here they are...
My favorite Vehicle Deduction: th-cam.com/video/9Hn3ITdXNv0/w-d-xo.html
Standard mileage vs Actual Expenses: th-cam.com/video/RwlvJOhnF2U/w-d-xo.html
Hope that helps! Appreciate you taking the time to check out the videos...cheers boss!
What if lets say i buy a skid steer for 50k and write it off, but my revenue was only 30k. Will I get a tax return then?
@Vadym Mazur - You cannot utilize section 179 to generate a loss. So, if you wrote off that much of the purchase against that amount of income then you would likely have no taxes, but it wouldn’t generate a refund. Speaking directly with a CPA in your area could also serve to be beneficial as well. Kudos to you & good job researching this topic...strongly recommend you continue down that path of learning and researching so that you continuously keep learning each year. Appreciate you taking the time to check out the video...cheers!
I’m having a hard time understanding. So when people say “I’m writing off the car” the person claims the full 18,200. Does the irs send a check to pay the vehicle?? Might be a stupid question.
@Eduardo Salgado - Never. Ever is there a stupid question. The only stupid question is the one you’re too scared to ask…so feel welcome to ask!!! That’s how we all learn.
No, the IRS does not send a check to pay the vehicle. When a vehicle is written off that simply means the business owner’s taxable income is reduced by the amount of the vehicle’s price that is allowed to be written off. It simply reduces the total gross revenue and the IRS considers this an investment into your business - which is why you’re able to write it off against your gross revenue.
A very general example…
Self employed person has $100,000 of gross income, then buys a vehicle that will be 100% used for business only (we’ll use the same $18,200 you mentioned above)…then $100,000 - $18,200 = $81,800 will now be the gross revenue amount. So essentially you’re able to buy a vehicle with pre-tax dollars.
Hope that was a helpful explanation. Hey, thanks for checking out the video and channel. Cheers boss!
@@Financial_Awareness so will I still have to pay notes on it?
@Ben Jenkins - If you didn’t pay cash for the car & you have a loan/payment to a financial institution…YES…you will still have to make the payments. This (the deduction/write off) is merely a way of playing accounting games…making your payment to the finance company and writing off the vehicle are two completely different things. If you don’t make the note payment the car will eventually be repo’d.
If I purchase a car for my business and use 80% for business purposes, can I write a check out of the business account and write 80% of the cost of the vehicle off in the first year?
@Bruce Irvine - I don’t really follow your thinking / logic of writing a check for 80%, but yes, if you plan on using it for 80% then that would be how much you would be able to write off from the purchase price / actual expenses in year one along with some bonus depreciation probably. There are two follow up videos from this one where I discuss the standard mileage rate deduction method vs actual expenses (section 179)...might be worth it to check them out if you have time. Appreciate you. Cheers!
What about box trucks for my trucking business?
@King KLV - Absolutely. Makes complete sense to me. Just keep an eye on the GVWR and the bonus depreciation that you’re allowed to take...work with your CPA to confirm the specific amounts you’re allowed to write off and above all...keep track of your receipts and/or your credit/debit card statements for tracking expenses. Shameless plug here - I’ve got a follow up video that goes more into comparing “actual expenses” vs “standard mileage rate” auto deduction and just wrapped up a video about which one I’ve chosen...it’s my next upload for next week.
Hey, appreciate you taking the time to watch the video. Cheers!
My wife has a small business DBA for cutting dogs in cat's toenails she comes to your location we were thinking of getting a minivan to use for the business would that qualify thank you very much for your video
@Edward Brown - You'll want to confirm with a licensed CPA in your area to be sure, but to me that makes sense. Thanks for checking out the video...appreciate you, boss! Cheers!
wait what does you have to have $25,000 in tax liability mean? i was just approved for my LLC for my business i started in July & am interested in purchasing a business vehicle. i already own a personal vehicle. help? thank you!
@SahuriPlays - No worries. It simply means you have to “owe taxes” in order to generate this write off....you cannot use Section 179 to generate a “tax refund”....I’m sure you have other deductions and write offs as well, but as it relates to section 179 you have to be generating enough revenue to be owing taxes from your business that you’ll be using this vehicle for...this then helps offset your tax liability by you owing less. Does that clarify and make sense?
Hey, if you have time, please feel welcome to check out my two other videos regarding Section 179 vs taking the standard deduction...they are both in my “self employed” playlist.
Hey, thanks for taking the time to check out this video! Appreciate you, boss...cheers!
@@Financial_Awareness Awesome !! Thank you so much & I’m definitely headed to your self employed playlist now. Appreciate the detailed response 💛
Keep up the great videos!
If I have no income in my business or income in a business where I am 50% partner , but I do have income from my job , can I still use 179 ? Also does the vehicle has to registered in business’s name or it can be in my name ?
@kshitij sharma - This tax benefit is not for W-2 employees. So, if your income is generated via W-2 then I’m sorry - you won’t be able to benefit from this. No, the vehicle does not have to be in the business’ name.
Hope that helps!
@@Financial_Awareness Thank you so much for your reply and BTW this video is really great !
Can you use 179 to depreciate a car in a business to generate a net Loss in order to offset personal income tax liabilities??
@Joseph Maroun - No sir. Section 179 cannot be used to show a loss.
@@Financial_Awareness
Hello, just to explicit: if I have personal cap gains of 1 million dollars. Can i use it to purchase 10 Model X to be rented out on Turo fleet business and depreciate all in that year generating 900k business loss that can be used to offset personal cap gains tax?
@Joseph Maroun - Double check this with a CPA: Your Cap Gains will likely go on your 1040, line 7...Section 179 goes on Schedule C, line 13...because 179 cannot generate a loss it will not offset any cap gains or any other revenue that isn’t noted on your schedule C.
You can show a loss on your Schedule C, but it wouldn’t be because of 179. That is how I understand it.
Can I offset my personal income tax liability from my full-time job if filing as a soul proprietor?
"Sole"
Hello, can this work for students some how if I have an LLC?
@Deano - If you have self employment revenue to be offset by this write off then it'll work for you. Keep in mind you cannot use Section 179 to generate a loss & you do have to begin using the vehicle for business in the year in which you purchased the vehicle. If you're a student & already own a vehicle that you plan to begin using for business then you'll have to stick with the standard mileage rate option.
Hope that helps! Thanks for taking the time to check out this video and being part of the channel...cheers!
Hello sir. I am a brand new real estate agent and am planning on selling my car and getting a used car for around $10,000. Would this apply to me even tho I haven’t made any money as a realtor?
@thatguy473 - Congrats on getting into real estate!!! It is such an amazing industry and I wish you prosperity and success! Yes, this will apply to your future real estate commission checks that you’ll likely earn throughout this year. Your new vehicle for your real estate business will simply need to be “placed in service in the year in which you buy it” which is fancy words for “write it off beginning the year in which you buy it.”
HOWEVER, most realtors I know drive quite a bit...sooooo...you might like the standard mileage deduction more than the vehicle write off portion that is referenced in this video. I have two follow up videos to this one and I strongly recommend you watch both of them...trust me, it’ll be worth your time. Personally, I’ve benefited more from taking the mileage deduction against over “actual vehicle expenses” which you’ll have a better understanding of once you watch the other videos.
I appreciate you taking the time to invest in your knowledge by watching this video and many of my other ones will help you out as well...check out the financial planning for realtors one as well. Cheers, boss!
@@Financial_Awareness thank you for your wishes, and replying to me so quickly. I’m definitely going to check out your other videos, seems like you know aloy
of great stuff in this field. Thanks again brother!
@thatguy473 - Will help if I can, boss! I mention parts of my background in some videos, but there’s a brief snip’it in each video description and on my about page. I love real estate!
Same! Im in exam prep right now and had the same question! Thanks for asking it! Are you gonna get a hybrid?
So if I buy a $60k SUV and use it 50% of the time for business use the most I can get back is $25k?
@RAJohnson713 - Assuming your SUV is greater than 6,000 lbs GVWR then you should be able to write off the full purchase price when you include some bonus depreciation...however...if you only plan on using the vehicle for 50% business use then I would say $30k would be half the vehicle purchase price, but I believe you can include a few more items along with the purchase...run it all by your CPA to be sure.
Appreciate you taking the time to check out this video, boss! Cheers!
So if my business grosses $500,000, and I purchased a $400,000 vehicle that weighs 6000+ pounds(Rolls Royce Cullinan) for 100% business ? What would be the result on my taxes? Using 179?
@Scott Wallace - Hey Scott, thanks for checking out the video man! Appreciate you taking the time. This video was made and intended for the average business owner looking to learn about Section 179. It is not intended for $400,000 luxury vehicle purchases. IMO, I believe most would agree that a $400,000 vehicle purchase is not normal…and I would strongly recommend anyone interested in learning more on that topic to speak with a CPA.
Again, the average small business does not need a luxury vehicle to operate their business. That said, the lease payment on the vehicle you’re referring to (assuming 100% for business) would be able to be a write off, but regarding writing off the full purchase price of expensive, luxury vehicles please keep in mind that even the bonus depreciation has limits for vehicles over 6,000 lbs GVWR.
Lastly, I may not have emphasized this enough in this video or my other ones about vehicle write offs…just because someone can afford to purchase an expensive vehicle…doesn’t mean they absolutely should.
To anyone trying to do what you’re referring to I would say, good luck with depreciation recapture! Because when you re-sell this $400k vehicle I doubt it would have lost too much value…and when you re-sell it you’ll likely owe income tax due to the luxury vehicle retaining its value (likely), but your actions to the IRS would imply the vehicle has depreciated in value…so if you sell it above that lower, depreciated amount you’ll owe taxes back on the difference…this is called depreciation recapture.
Hope that helps just a little bit. Working with a CPA on this topic would be ideal. Hope there are a few other financial nuggets in other videos within my content library. Cheers boss! Appreciate you.
@@Financial_Awareness good man! Thank you for the thoughtful response!
I’m starting a jets ski rental business, I have to tow a boat and jet skis, would I qualify?
@Josmer Carvajal - Yes, sounds like those purchases would be deemed “business related” and able to write those costs off. If you do use them for any personal use then you may not write off 100%, but if you work with your CPA and confirm those items will be for business use then I believe you would be able to depreciate and write off those purchases. Hey, thanks for taking the time to check out the video...hope there are a few more within my content library that are of interest to you. Cheers, boss!
@@Financial_Awareness for sure I will check out more of your content, I’m new to the business world and I want to be well prepared. U got yourself a new subscriber
@Josmer Carvajal - Hey fantastic! Super happy for you to take control over your wealth building efforts and get your business started...that is just awesome! Focus on your customers and deliver more value and your business will grow. Happy to help if I can if you ever have questions. Best of luck to you on your venture! 👍🏻👍🏻
@@Financial_Awareness yeah one mor question: can I use this on just one vehicle? Because I would be using probably 2-3
@Josmer Carvajal - Section 179 is applicable to more than one piece of equipment / vehicle. Depending on how you plan to run/organize the logistics of your business and these purchases, you might like my two other follow up videos on this vehicle deduction topic...perhaps section 179/write off for some of your purchases and using mileage deduction for others...you’ll have to decide for yourself. Working with a CPA for your business purchases/planning/needs will help you make sound business decisions as well.
Can i write off car payments and insurance payments for my car that im leasing. I use my car 50% for personal use and other 50% for business use driving for uber eats. Please help me before i file my taxes
@fabiann Moraa - Hi there! Yes, you can write off your car payment & insurance premium payments for your car that you are leasing. Here is a link to IRS that will help you understand some of this information...
www.irs.gov/newsroom/heres-the-411-on-who-can-deduct-car-expenses-on-their-tax-returns
Hope that helps and that you were able to get your taxes done in time. Appreciate you taking the time to check out the video...thanks boss!
Nice thanks for responding man , i send you good vibes 😇
How would I go about this as an independent delivery driver do I need to apply for a llc?
Actually I deliver independently but I also deliver pizza for a local chain if I used the vehicle for both could it still be written off
@kris6682 - Hey, Kris! Thanks for your question. No, you do not need to apply for an llc in order to take advantage of either this write off or the standard mileage deduction. The way you would go about this is to start by collecting information to help you make a good decision. Add up all the vehicle expenses you incurred each year AND also the mileage driven...then run the math on both options to see which write off gives you the most bang for your buck.
If you already own your vehicle and didn't purchase it in 2021 then you'll have no purchase price to depreciate and can only use other vehicle expenses as write offs. I'm assuming your occupation with the local chain is part of W-2 income you receive from that chain...so the mileage you drive while under that employment/shift would not be able to be written off. However, if the local chain doesn't have you listed as a W-2, but rather a 1099 delivery driver then yes, those miles/expenses could be used in addition to your other food delivery as an independent contractor. Hope that helps...you may want to check out my other video about this same topic.
Appreciate you checking out this video and the channel...cheers boss!
How about a vehicle over 6k lbs that I have owned already before forming my LLC ?
Unfortunately you won’t be able to write off the price because the vehicle is already in service. …but the ongoing actual expenses yes. The new vehicle is allowed to be used…doesn’t have to be brand new, just new to you.
Hope that helps!
When you sell an SUV over 6000 gvwr do you have to claim depreciation?
@Brian E. Buxton - Man, seems like you really have a handle on things. Love reading your comments, sir! Depreciation recapture is a real thing, but I did read something on the IRS website regarding not needing to recapture depreciation if you use that vehicle as a trade-in...so my honest answer is to check with a CPA in your area as I am not a tax professional....but I do believe you owe capital gains on whatever you sell your vehicle for if you’ve depreciated it down to $0...because you’re essentially taking your basis down to zero when you do that and if you sell a vehicle for $50k that’s been depreciated down to zero then it’s as if you’ve made $50k on that transaction. But like I said...a CPA can confirm/correct any of that. Congrats on all your hard work and the success that follows those efforts. Well done, boss! 👍🏻👍🏻
@@Financial_Awareness thank you! Am doing my best. And That’s what I thought I guess the trick is to not keep a vehicle long enough to take it down to fully depreciated status which means selling / trading it every 2, 3 or four years and that would avoid that issue as well. I honestly very rarely keep vehicles longer than three years, at least not what i use as a daily driver. I just ordered a new SUV yesterday and checked with my accountant on that so before I sell I’ll get with him on the best way to avoid reclaiming depreciation while also maximizing it
So youre saying if I buy a 3/4 ton truck with a standard bed for under $25k I can write off the entire vehicle??? 😲
@Jeff Yglesias - Yessssir! (assuming your business has more than $25k of revenue that can be written off in the year you purchase/place the newer vehicle in service)
Hi, very informative.
Some of the information is conflicting regarding the weight of vehicles.
We purchased a Ford Transit 350 Cargo Van and the GVWR is 9500 lbs. It is a commercial cargo van used 100% for business. (Ford also sent me a screenshot showing that the GVW (different from GVWR) is also 9500 which makes it even more confusing)
Many websites as well as Ford, are saying that the “over 6000lb” is related to GVWR, where some instances show “unloaded weight” it is very confusing. It is a very large van and believe it would be eligible for 100% first year deduction.
Can you shed any light on this?
Matt Lee - Hey, Matt! Great question...sorry you’re a little tied up on this. Under the Tax Cuts & Jobs Act and Section 179 your business vehicle needs to qualify as “heavy”....which is greater than a 6,000 GVWR. Normally, a van would be limited to $11,560 deduction, but if your Ford cargo van doesn’t have seating behind the driver, has permanent shelving installed, and painted exterior with company...then you would have an exception to the $11,560 limit and can deduct full price paid. Also, if you are using the Cargo van as a transport van used to transport people or property then that would qualify as an exception as well. Does that help clarify your concern? (I think you’re good to go for the full 100% 1st year bonus depreciation...reach out to a local CPA in your area to double check if you like).
Great video sir
Can even an img claim this??
@Yasir - what is an "img"? I'm not familiar.
Does it work for sole proprietorship?
@Maricela Gutierrez - What a beautiful name you have! Yes, this works for sole proprietor as well…it did for me! 😎
Cheers boss lady!
So i need to owe the irs 25000 a year b4 I can take advantage of this?
@JESSE 3K - Not exactly. It's not what you 'owe' it is how much profit you have and/or are showing on your tax return...because 'owing' the IRS $25,000 is not the same as having $25,000 of profit that you will then owe taxes on.
As an example, if you have generated $60,000 of profit and are planning to use Section 179 to the tune of $25,000 worth of a deduction then that would lower your profit down to $35,000 and you would then owe taxes based on $35,000. Alternatively, you could skip the option of using Section 179 and 'actual vehicle expenses' as your accounting method of depreciation and instead use the standard mileage method of getting a deduction...if that is something you'd like to consider or learn more about then I'd love to invite you to check out the other videos on the channel where I discuss that option. Hey, appreciate you taking the time to check out the video and learn more about this topic...keep it up, boss! Cheers!
You misspoke when you said a "tax liability of $25,000" you should have said "taxable income of $25,000" that's a pretty significant difference
@david lopez - Absolutely a significant difference between those two. My response to the comment above cleared it up a little better I think. Thank you for helping hold me accountable. Appreciate you for that. Cheers boss!
How can I best use this rule with a new EV for 100 percent ubering?
@FirstLookPro 7 - Hmmm, if after watching the vid you’re still asking how to do it then I’d suggest to watch a couple other vehicle deduction vids on my channel (or some other channel…don’t care), then reach out to your CPA to inquire about the paperwork and specifics for your situation. CPAs are great and can really help you do this correctly. Thanks for checking out this video and being part of the channel. Cheers!
Im a food delivery driver for uber eats. Can i purchase a car and use 179?
Yesi Cali - Yes, you absolutely can. However, as I mentioned in the video - be careful if the vehicle you purchase is also your PRIMARY vehicle (which is usually the case for most food delivery jobs). If it is also your primary vehicle, then you will not be able to legitimately be able to justify writing off the entire vehicle because a portion of that vehicle's use would be personal and not business. You'll definitely want to consult a local CPA in your area/state to make sure you get the maximum write-off / business expense possible for your situation. Additionally, keep in mind that you cannot use Section 179 to generate a business loss - so depending on how much revenue you're bringing in from Uber Eats would depend on what your final 'write off' numbers would look like. Appreciate you and hope there are a few other videos within my content library for you to check out...you may like the SEP IRA Account Limit video since you have 1099 revenue. Thank you! Let me know if you have more questions.
@@Financial_Awareness thank you so much
@@Financial_Awareness i will have a second car and i will only use it for business. Great videos(:
@@Financial_Awareness food delivery is my full time job and make about 36000, after deductions about 23000
@@yesic2288 - That is awesome! I'm so happy for you. I'm sure there are good days and bad days. With the current situation & many people working/staying home I hope you will continue to stay busy and generate more revenue. Do you plan to continue the full time driving for a while or do you have other goals/plans?
Is section 179 a thing in Canada?
@Harman Batth - To my knowledge this is just for United States tax code. However, Canada may have something similar...I am simply not sure because I do not know anything about the Canadian tax code structure. Thanks for taking the time to check out the video! Cheers boss!
Would a foodtruck qualify for this?
@Sir Che - Absolutely. Check with your CPA though because I would imagine a food truck would allow you more write-offs than just the vehicle purchase...my first thought is all the modifications you have to make to a vehicle to make it into a food truck. Lots of deductions in that business for you. Good luck with that business! Cheers!
the main question i have is; can you go to the dealership and use section 179 to get the car or do you have to regularly make payments on the vehicle like normal then get the money back when filing taxes for your business?
Hello, I used my car, I was an independent contractor for doordash and postmate for 2 years and I did not know about this when I had my taxes done, my car was repossessed, can I go back and use section 179?
@Vanessa Nwobi - Thank you for taking the time out of your day to watch this video - appreciate you for that. I'm terribly sorry to hear of your vehicle getting repossessed - so sad. My best suggestion to you is to seek out a local CPA in your area and explain your specifics to him/her. The reason I say that is because IF you can take advantage of this it would have to be through amending previous year's tax returns and that costs money...you would have to weigh those costs with the potential tax refund you would hope to receive by amending. Personally speaking, I've amended previous year's returns in the past and can tell you it is a slow process...so be patient if you do go down that route. In my situation, the cost to amend was worth it, but you'll have to run the numbers to see if it makes sense for yourself. Was that helpful? Again, thanks for watching the video - hope there might be a few more on the channel that are of interest to you. Cheers!
@@Financial_Awareness Thank you for taking out your time to reply, this was definitely help, thank you, Shalom.
@Vanessa Nwobi - My pleasure.
Hi I’m a DoorDasher and I’m wondering if I can use DoorDash to write off a car
@Angel Garcia - Hi Angel! Yes, as a 1099 contractor with DoorDash you can write off / deduct your vehicle expenses either through the standard mileage OR through actual vehicle expenses…and I go over each of these options in a few videos of mine. It is pretty straight forward, but if you’d feel better you can most certainly work with a CPA to see what’s the best for your situation.
Hey, thanks for checking out the video and being part of the channel. Cheers boss!
@@Financial_Awareness thanks for the reply and informative videos 🙏🏼 can u reply with a link to the other videos so can check them out
@@AngelGarcia-kd1ib - No problem, boss...here you go...
This one discusses the difference between taking the standard mileage rate vs the actual vehicle expenses and helps you understand which one you should do: th-cam.com/video/RwlvJOhnF2U/w-d-xo.html
This one I discuss my own personal decision of taking the standard mileage rate on my old Jeep over several years: th-cam.com/video/9Hn3ITdXNv0/w-d-xo.html
I made both of those after making this one that you are commenting on - so IMO they are a little better/more enlightening regarding the more important question of 'which one should I do?'
I'm proud of you for taking the time to invest in yourself by watching videos like this and growing your knowledge on these topics...well done! Cheers.
Can you cover RVs ?
@Ian Drummond - Will have to do a little more research on RV's and put it on my radar for a future video...thanks for the idea! Appreciate you, boss!
Hi, do you include total vehicle loan interest for the amount or would that be deducted annually (as paid) as it normally would?
Is the following correct?
2020 Section 179
-Financed Car Cost + Downpayment (minus what's listed below)
2020 Yearly Actual Expenses
-Taxes
-Title & Reg Fees
-Interest Expense
-Gas
-Insurance
-Other expenses
2021 and beyond actual expenses would include
-Interest Expense (until paid off)
-Insurance
-Gas
-Other expenses
Matt Lee - You’ll get the loan interest deduction as it’s paid each year. Not sure what you mean when you refer to “minus what’s listed below”. You get the deduction by depreciating the vehicle in year one plus all the actual expenses you incur. I do not believe the down payment is a write off...down payment and principle paid down are not expenses...the interest is an expense and certain one-time acquisition costs of buying the vehicle, but the bulk of the benefit is found in the bonus/accelerated depreciation in year one. Please double check with a local CPA.
Have you ran the math to see IF it’s better for you to use “actual expenses” vs “standard mileage rate” ?
I think we’re saying the same thing, I just made it confusing.
1) Full cost of vehicle in year one
(What I meant by minus was about the taxes and fees which were included in the loan that will be deducted separately under actual expenses for the year)
2) interest every year until paid off
3) actual expenses every year
Long term yes it might be better to deduct mileage as I do with my other vehicle but short term it works for our current situation. It’s not much of a difference.
Matt Lee - Sounds like you’ve got it all dialed in. I proposed that one thought because in some cases you can get better value from the mileage each year vs all the front-loaded benefits of actual expenses and accelerated depreciation in year one, but if you’re looking for more 2020 deductions then sounds like you’ve got a good understanding of what you should do. (because you can’t switch from actual expenses to standard mileage rate after the first year). Appreciate you boss! Keep it up man! Happy for your success. 👊🏻👊🏻
Can you write off a salvaged title vehicle?
@Mr Damage - Haven’t ever looked into it - so I’m not sure. What is a “salvaged title vehicle?”
@@Financial_Awareness when a vehicle is totaled out (via accident, theft, flood, etc). The title is no longer a normal title it is a salvaged title which shows the vehicle has previously been considered a “total loss” by an insurance company at some point.
So my question is if a vehicle has this title is it still possible to use section 179?
Additional side question, if you buy a vehicle from a third party and not a dealership can that also be written off?
@Mr Damage - Ahhhhhh…got it! Sounds cool if you know how to piece it back together into an operating vehicle.
Based on how you described it and my understanding, yes, you can still use this “actual expense” depreciation method…it would just be super weird/small because a vehicle that is totaled cannot be driven, but the purchase price could be a write off and any other part you purchase and install could be a capital improvement adding to the value of the vehicle and as such - be a write off as well. Double check all that with a CPA, but that’s how I see it…and if it’s correct then you could basically achieve the same thing of writing off the whole vehicle…just slowly as you buy the parts and piece it back together from salvage.
What does an average “salvage title” cost these days? Is it based on each vehicle’s condition? I’m also assuming a salvage vehicle title is cheaper than buying something that is actually operating…that’s obvious, right?
Thanks for sharing! I had no idea about this. Cool!
@@Financial_Awareness okay thank you for the information. No the salvaged title doesn’t really affect the drivability. Most cars are bought and fixed back to regular condition, the title just means it has previously been totaled by an insurance company. For example sometimes cars are seized due to being stolen, the car runs perfectly fine but the insurance company already compensated the owner prior to the car being found. Once the car is found it goes to auction where other people bid for it. Those people buy the car and it runs fine but has a salvaged title with the reason being “theft”.. there are other reasons such as flood or accident where the cost of repairs are more than what the insurance believes the car is worth.
I’ll give you a specific example on why some people buy salvaged vehicles. let’s say a Jeep Grand Cherokee srt8 is normally 80k new from a Dealership. From a Used dealership it’s around 60k with about 40k miles on the odometer. You can get a wrecked one for about 20k in auction let’s say it had a head on collision and needs a new radiator, bumper, hood, lights (basically the whole front end). You put about 10k into fixing it (replacing the parts, straightening the frame, painting it to its original color) now you’re 30k into the car but it runs normal. That’s why some people have “salvaged” vehicles. Because you can essentially pay half for the same car after doing a bit of work.
I guess my question was if instead of getting a new or used vehicle from a dealership and instead buy it from a third party (let’s say a mechanic who buys fixes and sells cars) would I still be able to write off the entirety of the price paid under 179? If instead of paying 80k at a dealership for a new one I paid 40k from a mechanic for a salvaged one, am I going to get rejected from using 179 because it wasn’t a pristine or new vehicle?
@@mrdamage690 - It is my belief that the vehicle simply has to be "new to you" - could be brand new, used, from a dealership, or private party...just make sure your documentation is on point and filed away along with any tax/business docs. Thanks for teaching me something new!
Could I get a cargo van for my business? It’s over 6k
@DA DA - I don't see why you couldn't. What's stopping you or why do you have hesitation about this decision? If you need it to help run your business more efficiently and this purchase could help drive more revenue for you then go for it man! Thanks for checking out the video and channel.
@@Financial_Awareness Thanks, I heard that if I use the van more than 50% for business I quality for the full write off of $25k. I would use it about 90% business. My side business did $220,000 gross, $90,000 net. First year so still a sole P but changing to S corp next year as sales continue to go up. Thanks 🙏🏽
@@MeetSuperDave - My goodness that is awesome to hear! Congrats on all your hard work that lead to this success. Sweet. I'd suggest double checking with a CPA because if you only plan to use it 90% for business then I would lean towards 90% of expenses/purchase could be written off. You are correct in regards to the 50% being needed in order to even be able to write off anything.
Does this apply in Canada?
@John Phan - Hey John, my honest answer is - I'm not sure. This video and all my other tax-related videos are primarily for USA based people/companies...so, take this as just my opinion, but if you have to file a USA tax return, then I believe it would apply. However, I am not aware of the Canadian Tax Code system.
Appreciate you checking out the video, man! Cheers!
The background changed how you look 😂
@Melanin Strength
- It does - I agree! Hahahaha. Thanks for checking out the video! If you liked this one you might like a couple of the follow up videos I've done on this same topic...I've got some other self-employed vids you might like as well. Appreciate you...cheers!
🤣🤣🤣👏🏾I thought I was the only one rewinding to verify I saw what I saw
😂💯
What color is that blue
@GONZALO RIQUELME - Ok man, so, true story…saw your comment a few weeks ago and have been meaning to find the swatch with the name of the color…and I finally found it and there’s like 4 swatches and none of them match what’s in the wall now! 🤪🤷🏼♂️🤦🏼♂️…so I’m thinking I may have thrown it away. I’m sorry! Lol. But I do know it is a Benjamin Moore brand of paint. Whatever their nicer quality product is. If I ever find it I’ll reply again. Thanks for checking out this video and being part of the channel. Cheers!