Buying a JEEP. Buy or lease (tax insight needed)

[RustedFox]

Hey amigos.

My Jeep is being built. It's awesome.

Any of you tax experts that can offer advice - I'm all ears.

I'm a 1099 at two jobs. I presently just drive my personal vehicle and deduct mileage.
My director says I should "lease" the new vehicle (then buy it at the end) and deduct 100% of the lease payments. She's smart, but says: "I think the law is that you have to drive it 50% or more for work only - ask someone else who knows more."

Anyone else know more?

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[cyanide12345678]

My understanding is that if you use the car for 100 percent business purposes aka getting you to work for your 1099 position and the car weighs more than 6000 lbs then you could deduct 100 percent of the cost of the vehicle as a business expense. Check with an accountant.

If you use the vehicle less than 50 percent for business purposes and mostly for personal use then you cannot deduct the cost of the vehicle.

If you use it between 50 and 100 percent for business then you can deduct that specific percentage of the cost of vehicle.

I would personally just buy it and deduct the cost rather than lease.

Check with your accountant.

Can I Write Off the Car I Buy for My Business?

Section 179 of the tax code lets you deduct the cost of a business vehicle. See the requirements and how to take the deduction.

www.thebalancemoney.com

 

[WorkNoteEmergency]

6000 lbs is effing big. A Tesla Model S is 4600 lbs.

 

[bravotwozero]

Model x is over 6k

 

[emergentmd]

If you meet the criteria, you can take full deduction up front. I thought about doing this 3 yrs ago but decided not because you lose mileage deductions. Correct me, but I believe you take either/or and not both.

I bought a Model Y costing 55K. So if I took the 55K, then that is it.

In the past 3 yrs, I have driven 75K = 41K deduction on mileage. Once I hit 100K, then its a push. I don't plan on getting another car for awhile so mileage works out better for me.

 

[cyanide12345678]

If you meet the criteria, you can take full deduction up front. I thought about doing this 3 yrs ago but decided not because you lose mileage deductions. Correct me, but I believe you take either/or and not both.

I bought a Model Y costing 55K. So if I took the 55K, then that is it.

In the past 3 yrs, I have driven 75K = 41K deduction on mileage. Once I hit 100K, then its a push. I don't plan on getting another car for awhile so mileage works out better for me.

Yes you cannot take the mileage and cost deduction the same year the vehicle was purchased. But as far as i know, you should be able to deduct the mileage the next year. I could be wrong, but that’s my understanding.

 

[emergentmd]

If I am wrong, then I screwed up. But I was told you can't do that b/c your essentially double dipping.

 

[valianteffort]

Open an LLC in Montana and register it there. No yearly tax or sales tax. Little gray on if IRS is cool with it or not, but no formal rules against it.

 

[JacobMcCandles]

Are you working with a CPA? Typically, driving from home to the hospital isn’t able to be deducted as that’s commuting. Driving from one hospital to another would be deductible. I’m sure you can find a CPA that’ll do anything but I would search and make sure you’re making an informed decision on the mileage you’re deducting.

 

[emergentmd]

That was my other problem. Take 55K up front and risk an audit where in no way could I reconcile my mileage vs what my calendar said or Just take yearly mileage which would catch up to the 55K in 4-5 yrs.

 

[RoyBasch]

Are you working with a CPA? Typically, driving from home to the hospital isn’t able to be deducted as that’s commuting. Driving from one hospital to another would be deductible. I’m sure you can find a CPA that’ll do anything but I would search and make sure you’re making an informed decision on the mileage you’re deducting.

I think this is correct (at least in my state). Your first drive to and from work isn’t deductible because it’s considered a standard commute and everyone does that. It’s only if you make more than 2 trips per day (I.e. if you went to multiple hospitals per day) that mileage would be deductible business driving expenses.

 

[GoBeers]

I think this is correct (at least in my state). Your first drive to and from work isn’t deductible because it’s considered a standard commute and everyone does that. It’s only if you make more than 2 trips per day (I.e. if you went to multiple hospitals per day) that mileage would be deductible business driving expenses.

in which case it's best to buy the car and take full deduction up front?

 

[JacobMcCandles]

in which case it's best to buy the car and take full deduction up front?

Not a CPA but I would think it would be hard to justify a normal ER doc writing off the entire vehicle.

 

[Apollyon]

6000 lbs is effing big. A Tesla Model S is 4600 lbs.

I mean, my 2018 Ram 2500 4wd with Cummins started at 5840. You ain't kiddin'. A 3 ton vehicle is f'n big.

 

[WorkNoteEmergency]

I mean, my 2018 Ram 2500 4wd with Cummins started at 5840. You ain't kiddin'. A 3 ton vehicle is f'n big.

Yeah, the old 6 wheel Army trucks were called “Deuce and halfs“ because they weight 2.5 tons.

 

[cyanide12345678]

If I am wrong, then I screwed up. But I was told you can't do that b/c your essentially double dipping.

Mileage deduction is a rough estimation of the cost of fuel And maintenance (oil changes, new tires etc). So it’s the deduction for the cost of running a vehicle for business purposes which is a business expense. Buying the vehicle is a different expense. Different things i believe.

 

[cyanide12345678]

If I am wrong, then I screwed up. But I was told you can't do that b/c your essentially double dipping.

Mileage deduction is a rough estimation of the cost of fuel And maintenance (oil changes, new tires etc). So you can either take the standard mileage deduction or itemize costs of running a vehicle. So it’s the deduction for the cost of running a vehicle for business purposes which is a business expense. Buying the vehicle is a different expense - so acquisition cost vs maintenance/usage cost. Different things i believe.

 

[justin8818]

The 6000 lb limit is not how much the vehicle weighs but its GVWR. Also, you can claim a home office and then the mileage from your home office to work is then deductible. As always, consult a CPA!

 

[bravotwozero]

The 6000 lb limit is not how much the vehicle weighs but its GVWR.

What’s the difference?

Also, you guys might find the following list of vehicles useful:

https://diminishedvalueofgeorgia.co...List-Special-IRS-Depreciation-Tax-Benefit.pdf

 

[miacomet]

I'm all for Jeeps, but is this thread EM-focused, @southerndoc? I'm super confused by the new rules, please clarify.

 

[JacobMcCandles]

I'm all for Jeeps, but is this thread EM-focused, @southerndoc? I'm super confused by the new rules, please clarify.

Are you talking about the stickied post that says all political threads need to be EM-related or are you just trying to be that guy by asking the same question in two different threads?

 

[NYEMMED]

I'm all for Jeeps, but is this thread EM-focused, @southerndoc? I'm super confused by the new rules, please clarify.

Is this thread political??

Do we have to go robocop on the entire forum because 1 thread was moved??

 

[finalpsychyear]

That was my other problem. Take 55K up front and risk an audit where in no way could I reconcile my mileage vs what my calendar said or Just take yearly mileage which would catch up to the 55K in 4-5 yrs.

The current section 179 is lower this year if your going to deduct the car in full.
You buy a model x for 100k and claim 75% business use plus the bonus depreciation which has dropped to 80 percent this year and you are deducting 60k but its upfront in this tax year.

People do sketchy things like buying the suv on dec 31st and driving it directly to work and parking it then try and claim 100% business deduction.
The beauty or at least if you had done this deduction when trump took office is you could have done 2 vehicles before the bonus depreciation goes away.

 

[DoctwoB]

Can’t speak to the tax implications but definitely check out FORUM | LEASEHACKR if you’re looking to lease a jeep. There’s been some crazy deals, especially on the wrangler 4XE which takes advantage of lease loophole for plug in EV tax credit.

That’s where I got the tip for deals and was able to lease a 115k Mercedes EQS for 2k down 600/month.

 

[emergentmd]

I'm all for Jeeps, but is this thread EM-focused, @southerndoc? I'm super confused by the new rules, please clarify.

What a Karen. Here to ruin another thread. Not surprised. Me thinks he is here for more validation when everyone left his thread takeover.

I’m sure he feel that this subforum is not Karen inclusive along with the other 10 subgroups.

 

[justin8818]

What’s the difference?

Also, you guys might find the following list of vehicles useful:

https://diminishedvalueofgeorgia.co...List-Special-IRS-Depreciation-Tax-Benefit.pdf

GVWR is the maximum allowable weight of the fully-loaded vehicle (including passengers and cargo)

 

[beebermd]

Open an LLC in Montana and register it there. No yearly tax or sales tax. Little gray on if IRS is cool with it or not, but no formal rules against it.

as a lambo owner........can confirm. Its a thing. Google montana LLC, there are many companies that offer this exact service. basically, they set up a company that you own, but is located in montana.....car is purchased under the LLC and you get montana plates and don't have to pay sales tax. For normal vehicles its not worth it, but sales tax on a 300k car is nice chunk of change. Its also really big in the RV community as well. However, certain states have rules about vehicular residency and registration.

With regards to lease and tax write offs.....Ive done both. as mentioned, above a GWVR, you can take deduct the whole thing. I go to a lot of different sites. I claim 5% of my house as my home office, so I deduct my mileage from my house to my work sites. I usually commute 100 miles so it adds up. I claim 95% buisness use. If you claim 100% all the IRS has to prove is that you used it personally 1 time. 5% is just a buffer.

I have also leased and taken the deduction on the lease payment as well. You can do both on the same vehicle, just not in the same year. Its value is also very state specific. I am in Texas and you have to pay yearly property tax on leased vehicles and you pay sales tax on the FULL amount of the vehicle, not the leased amount, so depending on your lease payment, it may or may not be worth it. For me currently, 100mi a day x 12 days a month at 50 cents a mile comes out to $600/month deductible. So if I bought a car and kept my payment under $600,i would take the milage as it basically pays for it self. If I were to go crazy and lease a car that had $1200 payment, I would take the lease payment deduction.