Does anyone understand the details of writing off vehicles for a business?

I understand that you can either write off lease payments under 2yrs term (or on vehicles over 6,000 GVWR?) or depreciation and only the % you use it for business.

What constitutes business use besides the obvious. If the truck is wrapped in your company logo does it count because its advertising?

If you are selling performance car parts can you write off cars for product development costs or how does that work?

I've recently started a side business and was evaluating vehicles for it but still unsure as to how to budget accordingly/differently than I would for a personal vehicle.

First, is the vehicle is your name or the businesses name? What about insurance for it? Are the payments made from your personal account or the business account?

If all of the above is from personal accounts, stop, do not pass go, do not collect $200.

captdownshift wrote: First, is the vehicle is your name or the businesses name? What about insurance for it? Are the payments made from your personal account or the business account? If all of the above is from personal accounts, stop, do not pass go, do not collect $200.

Just write off the mileage instead if that's the case which I've always found works well.

track your miles. It will wind up better 99% of the time.

My understanding is that you can write off the cost of putting the logos on the vehicle, but that would not make the vehicle used for business in and of itself.

do the mileage, but also understand that no one believes that a personal car is used for business 100% of the time.

Also, make sure you know what a write-off is... Super common small business misconception is that a write-off makes something free or nearly free. the write-off only reduces your 'pre-tax' income, so you really only make back the 10%, 20%, 25% (whatever your highest tax bracket is) of the cost best case. If your income is nothing, the write-off is similarly nothing.

Said vehicle does not yet exist. I am aware that a write off only offsets taxable income. Also this isn't wanting to slap a sticker on a personal car and say "business".

If it were a business vehicle the payments/insurance etc would likely be through the company

In reply to Jaynen:

Go to irs.gov and look up their publication on business use of a vehicle. This is one of their favorite topics and they have very specific rules that must be followed.

Writing off miles is easy and just needs some vague records to justify the mileage.

But when attempting to depreciate a vehicle as a business expense, especially if it's not a dedicated solely used for business vehicle, that's much more complex and fraught with mistakes.

I agree with the above, just write off miles and be done with all the headache.

You can depreciate it in dribbles (mileage).

or

You can take a one time write off.

This is where the vehicle lease comes into play, you write off the entire lease payment as an expense.

Of course you have nothing left in the end, the money has been pissed away.

But you looked good doing it......

Ill stick to my original plan. Just make payments if necessary, document everything and then let my accountant get my money back if possible

If using a car for both business and pleasure mileage is probably the easiest. The mileage is supposed to include wear and tear, gas, and normal maintenance. However if you have direct expenditures such as advertising (stickers, required business insurance, emergency maintenance during a trip, business inspections, etc.) I would be sure to write them off. Unless you have a CPA or accountant that signs your return I would be careful about depreciation, cost of overall insurance and things like that. However, i'm sure some of these costs can be written off as a percentage of business use to pleasure use.

Have to be careful about state taxes. In Connecticut, according to the tax auditor that did my business, if the vehicle is used for a business, you are supposed to pay 6.75% of the value of the use, since it's a "sales and use" tax, not a "sales" tax. Note that I said "supposed".

"it depends" and for this professional tax advice would go a long way.

I use my truck for 100% business purposes and there is some bs where I can write off the entire purchase price in one year if I want (I do) using an additional form, or stretch it over a few years (does not need to match payment just a guess on years until "used up" there may be a specific normal amt for vehicles, again, professionals know). All expenses, insurance, repairs, fuel, etc are all paid for by the business.

You may be better off just deducting business mileage depending on how expensive the vehicle is to operate. 

I would contact a CPA. But that's just me. 

Danny Shields said:

In reply to Jaynen:

Go to irs.gov and look up their publication on business use of a vehicle. This is one of their favorite topics and they have very specific rules that must be followed.

https://www.irs.gov/taxtopics/tc510 

I use my truck for both business and personal. The truck is registered and insured in my name. This leaves two options for tax write-offs. 

1. Track your business miles and get the standard $0.5x/mile deduction. 
 

2. Track all your expenses including gas, maintenance, repairs, registration, insurance etc. Track all your miles and keep record of how much is personal vs business. You can then write off the percentage of expenses that's equal to percentage of business miles. 
 

I don't have an accountant so I use Quickbooks for my accounting. They have a handy app that's linked to my business credit card so it categorizes and tracks expenses as they show up on my credit card. It also tracks my mileage. At the end of the year the software automatically selects the deductible method that gets you the highest deductible so you don't have to do any calculations. 

I used to sell heavy equipment and when people didn't have the money to buy or didn't want to deal with a long depreciation schedule, we would do a lease with a $1 buyout at the end.

Their larger than normal lease payments were 100% a business expense and therefore eligible to be written off in the year they were paid. They would but the equipment for $1 at the end of the lease.

This only works if the equipment/vehicle is bought in a company name but I did this literally hundreds of times

This thread is from 2016, I'm sure he's figured out a solution by now

In reply to MadScientistMatt :

Check local tax laws.  In Connecticut, a vehicle branded with your business name is subject to a "use" tax, which no one pays until the audit catches you.  Ask me how I know.