Love this channel! After my wife being a 1099 contractor. We officially registered her business this year! LLC (s-corp). Learning more and more about tax from this channel
Great job with the information. I really appreciate you presenting the cons. Many people see this as an easy deduction, but they don't realize the corner they paint themselves into.
Great video. I liked how you present examples of this vs that, side by side, plus explaining actually what is it for. A lot of people rave about deductions, when sometimes they might not be as effective.
This is amazing. I couldn't agree more, the accounting youtube personalities NEVER talk about the downsides of 179/bonus depreciation, they just tell you to buy a car and take the deduction.
To reason #3 there is a different schedule or time period for recapture tax. I believe vehicles is a 5 year period so it isn't ideally a death sentence if you write it off 100% with bonus depreciation but keep it for 5 years.
Keep in mind the IRS requires a business to deduct all legitimate expenses, including vehicle expenses and depreciation. If you fail to write off all expenses and as a result you increase your earned income credit, you could be in very deep trouble.
@@ms.marynailz748 Obviously, without a full audit, they wouldn't. But keep in mind that the IRS has decades of statistics for all types of businesses, so anything too far out of the norm would be a red flag.
So basically, what he is saying is if you are for example wanting to write off a $40,000 vehicle for your business, make sure your income for the business is above $40,000 for it to actually be beneficial?
I owed almost 150k in taxes last year. Never Again! I am adding a vehicle to our fleet this year. Should we purchase the vehicle straight out or finance it? Does it matter for section 179?
So basically my $26k pickup truck for my welding business is a necessary purchase obviously by both me and the irs, it won’t bring me into any super negative profits if I write the entire thing off so it’s worth it there, it’s obviously over 6k lbs, and it’s used for businesses purposes 90+% of the time. From what I gather from your video, Im in the perfect situation to write off the entire vehicle???
what if you use your vehicle for personal use but it has company info on the vehicle as advertising? does that mean driving anywhere is now company business if advertising for your business is necessary?
Is there a source where I can start to learn the tax codes? I am new to this tax stuff because I would like to start a business but there is a lot of info out there and I need to know what is right and what is not.
For the life of me, I can not find out why vehicles have to weigh at least 6000 pounds. Does anyone have the answer, because Google does not. Sweet content here!
I learned the hard way. Had a business truck 50/50 personal. Ended up having to sell and paid capital gains tax. So basically all the savings up front were paid right back.
I mean that’s not entirely too bad. It’s not like you lost money. You just saved money when maybe you didn’t have it to pay a boat load of taxes, but once you sold the vehicle you had the money to pay whatever capital gains tax you had, which would probably be a lower cost in the long run depending on how much you sold the truck for later.
Let’s say I own a LLC as a disregarded tax entity, but I also get a standard salary from my primary job. If I have enough write offs to bring my LLC’s taxable income to below 0 will the excess write offs flow through to reduce the taxable income from my job?
Can I write off a vehicle that I'd purchase in my personal name since business is new and didn't have enough business credit or income at the time but solely use it for business?
@@Mr.Bryan1234 I'm very confused, I bought a f450 and paid a big down payment out of my pocket because my business has not enough money on it, my cpa told me I can't put it as a deductible except for only the interest I'm paying to the dealer 😢
This was very helpful indeed, lots of clients asking for 100% write off and sending me videos and driving me nuts; this is the greatest video so far that I'm sending them in response to clear all their "too good to be true" thoughts. Thank you!! Don't stop!!
I purchased a 6000lbs truck 3 months before I was fired from doordash, would I be able to get any kind of benefits from 179 tax break , the vehicle was used over 50% of the time
THE BEST Video EVER. Very True facts. I tried to explain this to a nosy guy who got involved in my buddy's & my conversation. He thought if he sets up a LLC he can write off a car and get it for FREE (?????) without making any money (cause the internet strangers told him so). He got upset on me, when i told him, U HAVE to make enough money and the TAX value is the value of that car (and also it has to be used atleast 50-60+ % for the business).
@@4everyoung16because you have to keep mileage records of business and personal use for every single trip. Or at least total mileage records with all business trips so you can show the math.
Any vehicle can become a 100% business deduction, just by wrapping it with the contact info and logo for your business, correct? I have done this, and also taken advantage of Section 179 for over 20 years. The 6000 lb qualification is for regular cars, (ie G-Wagon, Suburbans, etc). There is another class for 15k lb and up commercial vehicles. I've never had an issue with 179, and I was audited twice. Both times, it wasn't the vehicles that triggered the audit. It was my 'independent contractor' status as a consultant working for headhunter. They paid me on 1099, but told IRS I was W-2. Once I sent my original contract to the IRS, it was resolved. I was indeed an independent contractor. BTW, your channel is absolutely the best of its kind. Period. I recommend you all the time! Thank you for the great info!
Actually that is incorrect. Putting g a logo on a vehicle doesn't change it's deduction percentage. If you're still driving it 50% for personal use, the logo doesnt change the 50% business deduction to 100%
@@mtigress4589 serious question if you have your truck wrapped and your driving is your truck not being used as advertising which can lead to business ?
@@jbarres80 It is a one time advertisement expense for the cost of the wrap. It does not change the nature of the usage. If you're still driving around.picking up your kids and getting your kids 50 percent of the time wrap or no wrap, the business use is only 50%.
Exactly. You simply cannot drive a business vehicle for a personal trip regardless of what you are driving. However in practice I don’t see why IRS would question you if you have say a cargo van that has no seats. Where it’s glaringly obvious is when you drive a minivan with 3 car seats in the back and pretend that you aren’t picking up kids
Great video! This is valuable information that, as you said, others don’t bring out. The title is fair because is is a counterbalance to all the other videos that tell you how and why you should write it off. This highlights important reasons why it could be detrimental to your bottom line such as the danger of 179 deduction and selling the vehicle.
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It confuses me the whole depreciating the whole purchase price of the car. So if a car cost 70k and you write off the 70k in the first year. What exactly are you doing? And are you still making payments towards the 70k? Might sound like a dumb question I know :( but at least I’m being honest
I have this hypothetical scenario: In 2024, I buy a used Black Chevrolet Suburban for $32k to qualify for Lyft Black SUV service, I drive it in 2024 for Lyft grossing at least $45k (doing it part-time), gas expense is $7,000, car insurance is $1,800 (guessing here), and assuming no other expenses, wouldn't I be able to take the full $30,500 section 179 deduction in 2024? Let me know what I am missing. Thanks.
quick "hypothetical" question this may sound stupid. Let's say I have a salaried position making 120K per year subject to normal federal/state tax....then I did Uber Eats, and write off the depreciation of a recently purchased car, as well as the operating cost of the vehicle...which creates a net loss on that Uber eat personal business due to the high price of the car. Can I use the net loss tax deduction from the Uber Eat personal business and apply it to the 120K job completely not "related" to the business---let's say the 120K is a teaching job or an engineering job... I'm curious since I've heard some people say they do this, and I don't believe it can be done.
Thank you for what you do. I used a Truck for 100% Business. The truck is in my name, not under the business name. I understand Actual vs. mileage. Can I claim the Depreciation over 5 years even if the Truck is NOT under the LLC name? PLUS, the actual or mileage, whichever one benefits me the most?
THANK YOU -- I've been waiting for the downsides. I'm getting a 6k and was looking at older-new/used but was thinking i should get New for depreciation. Now lets say i profit 200k over 5 years, would it be responsible to get a $60k vehicle [cargo] and write off say 20% over the 5 years? With no plans to sell it. Used for biz 90% of the time
So let's say I write off 100% of the vehicle in the first year. You mentioned if I don't use the vehicle for 100% use for business within give years I will have to pay some back. But what about after 5 years? After five years is personal use fine without penalty?
I don’t own a business and I work from home for a company in California. Is my Jeep Grand Cherokee eligible for IRS section 179? Should I write off my vehicle expenses?
Is it accurate that if you choose section 179 for a business auto tax deduction in your first year you cannot go back to the standard mileage deduction? And if so, would you recommend perhaps taking the standard mileage deduction in year 1 so that if needed you could go back to using that method if beneficial?
The worst part is when someone buys a more expensive vehicle for a better 1st year right-off, which ends up costing them because the vehicle is more expensive.
When I read section 179. I was wondering how the heck and why are people doing this. At the end of the day it’s still a deduction. You are still making payments on the car. Your business would have to still make money in order to write that deduction off. Your video pretty much explains it. The deduction only reduces your taxable income. Which you still have to make money on the business.
I bought a commercial vehicle last Oct. The business didn't make any money but had a ton of expenses. I plan on trading it in for pick up for business use. So basically I should not write it off?
Thank you this is so great, just have a question if you use section 179 and deduct the hall price of the car and after 5 years you decide to sell, should you pay back the recapture income tax? thanks
With the new push for EV's, Im sure the cars will become lighter in weight. Could effect the deduction. Also, I prefer "leasing" vehicle in company name, so all is a business expense, all repairs covered under warranty as you wont keep it more than 3 years and if ever having assets attached by courts, vehicle is not yours. Sometimes "renting" better than owning.
