Hey everyone … so this year my business (sole proprietor LLC) made $115K total … after expenses and mileage deductions I’m at $38K which means I’ll owe over $5K in taxes … I bought an old Chevy Silverado 2500HD this year for $8K and I’m wondering how much of that cost I can use to lower my taxable income … I’ve heard 60% or 100% but I’m not sure which applies … any advice would be great
Mileage deductions usually give you more value compared to the price of the vehicle … without even looking into the details I’d say go with mileage for simplicity
Alby said:
Mileage deductions usually give you more value compared to the price of the vehicle … without even looking into the details I’d say go with mileage for simplicity
The person who posted this just got the truck last month … so they’ve only used it for less than a month … unless they’re driving a crazy amount of miles it might be better to depreciate the truck instead
@Bailey
It really depends on how long they plan to use the truck for business and if this year’s income is unusually high … it might be better to write off 20,000 miles over the next 3 years instead of taking $8,000 now and only deducting cash expenses in the future
You can’t claim both mileage and depreciation for the same vehicle in the same year … is the Silverado the vehicle you’re claiming mileage for or is it a second vehicle … and are you claiming mileage on a different one
Denim said:
@Bailey
Yeah it’s a second vehicle … I just bought it in early December
Okay … so you can claim mileage for the first vehicle and actual expenses for the Silverado … a lot depends on whether the Silverado is used 100% for business or not … if it is 100% for business and you claim bonus depreciation you can deduct 60% of the purchase price in the first year … the other option is the Section 179 deduction which lets you deduct 100% of the purchase price but has more restrictions … since your net income is $38K the Section 179 deduction would give you an $8K deduction compared to $4,800 with bonus depreciation … just keep in mind if you fully depreciate the truck your basis will be zero so if you sell or trade it later you’ll have a taxable gain
@Bailey
Got it … so for 2024 I’ve been using my GMC Savanna 1500 but I’m switching to the Chevy starting January since the GMC is old and giving me issues … the Chevy will be used 100% for business and I have a personal Infiniti … from what I understand I can use mileage for the GMC and 60% of the Silverado’s value for 2024 … then just use mileage for the Silverado in 2025 … I’d like to avoid Section 179
@Denim
Not exactly … if you want to use standard mileage you have to do it in the first year … in future years you can switch from standard mileage to actual expenses but you can’t switch from actual to standard
@Bailey
Ah I see … so take 60% this year for the Silverado and use actual expenses for 2025 … that makes sense … thanks for explaining and being patient
@Bailey
Wait … if you claim depreciation in the first year can you not use standard mileage in the following years … and if you claim standard mileage in the first year can you switch to depreciation later
@Bailey
The Silverado probably weighs over 6,000 lbs which would classify it as transportation equipment … the maximum Section 179 deduction would be the lesser of the purchase price or around $30K … under 6,000 lbs it’s classified as a car and subject to luxury auto limits
You can’t do both … you can only use the mileage deduction unless it’s a separate vehicle
Zev said:
You can’t do both … you can only use the mileage deduction unless it’s a separate vehicle
Sorry I should’ve mentioned … the mileage is for my GMC Savanna 1500 which I’ve been using … the Silverado is a separate vehicle I bought in early December
@Denim
Yeah … in that case you can deduct the business portion … but once you do you won’t be able to take the mileage deduction for that vehicle