STOP Dont Buy a Vehicle Until You Watch This! 3 Ways to Write off the FULL Cost Under Section 179.
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- čas přidán 28. 06. 2024
- How to write off FULL value of a new business vehicle in 2020 | Section 179 explained.
What is Section 179? How does section 179 work? In this video I show you three ways that you can use section 179 of the tax code to write off the full purchase price of a new vehicle or buy use the deduction to finance the purchase. (Section 179 expense deduction) IRS Section 179 Depreciation Deduction Overview explained in plain English (IRS Publication 946)
- If you own your own business or want to start your own business this may help you reduce your taxable income.
- Even if you are not an accountant this will give you some insight to the type of tax advantages business owners have, because the tax code is primarily written for business owners and people who create businesses.
This is an elections allows you to accelerate depreciation on eligible assets. It allows you (the business owner) to take a greater tax expense deduction (Depreciation in this case) and thus it further reduces your business taxable income.
What property qualifies for section 179? Some Examples:
- Machinery and equipment.
- Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs.
- Gasoline storage tanks and pumps at retail service stations.
- Livestock, including horses, cattle, hogs, sheep
- Vehicles used in business you can take 179 up to a certain amount (see the rules)
What property does not qualify for section 179? Some Examples:
- Assets purchased and placed in service that are used to generate “rental” Income
- Buildings
- Land and land improvements
- Leased property (Yes and No) See Pub 941
What are the downsides of using Section 179 to purchase or finance a vehicle?
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IRS Pub 946- www.irs.gov/forms-pubs/about-...
IRS pub 463- www.irs.gov/forms-pubs/about-...
More info on section 179- www.section179.org
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I hope people understand that this does not mean "free car" or "free car payments". This just means you pay less in taxes as a deduction. It's not a dollar to dollar deduction or credit. Don't go into debt or don't buy a car you don't need or spend more than you need to. Please understand.
I gotta watch this again so it can sink in
2x already
Same 🥴
Oh wow... I live in a small town in Louisiana & everyone here is basically farmers.... Even my mom... Everyone knows everyone... Now I see why the husbands drives the big nice Ford trucks and the wives drives the new expeditions or Tahoe trucks💀Dang... sad part of this is... nobody is gonna tell the next man this... My dad died 3 years ago and he was only 1 out of 3 African American men that owned a ranch... If he new this trick life would’ve been so much easier for him... after he passed me and my mom went out a brand new tractor and her notes are over $1K each month... ButGod if we would’ve knew this 3 years ago...Life has been really hard... Man you’re God sent... I will be reaching out to you as soon as I share this video with my mom... I’m finding you even if we have to jump on a plane and come to Maryland to help us save our Ranch and livestock... We need your help!!!
Thank you for you kind words Yolanda and thanks for watching the video. I look forward to speaking with you soon.
Facts I always wondered how businesses owner's Drive Big Dog's.
All the best to you and your family. I hope that you guys are able to save the ranch.
It's not a trick, it's the Trump tax changes that are in effect for another year or two. The 100% depreciation came into effect in 2017.
God bless you! I hope that all is well with you and your family. God is so good I’m praying for healing and love to come your way!💙 stay in faith and continue to seek God’s face!
I'm glad you mentioned the pitfalls and the IRS publications. Your video made an adequate summary explanation on the basics of the Section 179 deduction, but in the example you gave starting at 7:30 to 8:30 about using the 179 Deduction on leased vehicles is wrong and would subject someone to the depreciation recapture rules and have to repay all/most of the deduction. In your example, you use a GMC Yukon worth $60,000 with a 24-month (2-year) lease agreement. As you mentioned elsewhere in the video, the full amount of 179 deduction would not be able to be taken unless the vehicle is 100% business use and the taxable income equals or exceeds the usable percentage (disallowed portions can be carried forward for the life of the property), but if someone were to do as you suggest and trade in the vehicle after the 2 years it will adversely affect their taxes.
Under depreciation rules a vehicle is considered a 5-year property. You subtract the 179 deduction from the basis first and then calculate depreciation on the remaining basis. Lets say the Yukon is placed in service at the beginning of January during the first year, the person's vehicle logs justify a 75% business use, and there is enough taxable income for the person to take the full ($60,000 x 0.75 =) $45,000 of the 179 deduction allowed during the first year and no unused 179 amounts carry forward to the second or later years. For simplicity, lets assume straight-line method is being used (up to 20% of remaining basis deducted for depreciation each year of the 5-year lifespan) and the vehicle is the only business asset. The total claimable depreciation expense would be $47,250 ($45,000 for 179 and $2,250 for the normal straight-line depreciation of $3,000 x 0.75 for the business use percentage) on the vehicle for the first year. Lets assume the business use percent remains at 75% for the second year and another $2,250 is claimed. This would be a total of $49,500 of depreciation claimed, but if the vehicle is traded at 2 years, before it's 5-year depreciation lifespan has elapsed, that entire $45,000 of 179 deduction becomes taxable gains and gets added to all the other taxable income the person has for the year... and there's no tax withholding on it, potentially causing the person to owe taxes (though this could be offset with a sufficient 1040-ES estimated tax payment before the end of the person's fiscal year) come tax time.
The other thing is that the minimum 50% business use requirement for the 179 deduction must be maintained for the ENTIRE 5-years of the vehicle's depreciation lifespan. So even if the Yukon wasn't traded in after the second year the person still has to maintain using the vehicle at at least 50% for business use for years 3, 4, and 5, otherwise you run afoul of the depreciation recapture rules again making part or all of the $45,000 for the previous 179 deduction taxable.
The most important things to remember about using the 179 deduction for vehicles:
(1) DO NOT sell or trade in the vehicle before 5 years.
(2) DO NOT let the vehicle's business use drop below below 50% and maintain vehicle mileage logs to back it up.
What isn't covered in this video is how and why businesses effectively use the 179 deduction. Just because people CAN use the 179 deduction (and/or special depreciation for certain assets) to write-off some or all of the cost as an expense during the first year does not mean they SHOULD use the 179 deduction. Business equipment and vehicles eventually have to be replaced and if a business cannot replace them the business cannot operate. So, the IRS allows for depreciation as a method to reduce the taxable income with the idea that the business will need the money to reinvest in itself and will be setting aside an equivalent cash amount equal to the depreciation as part of their budget to eventually replace the asset. Regular depreciation (whether it is straight-line, MACRS, or other method) must be prorated based on the when during the year it was placed in service, and it's not always possible for a business to put new assets into service just in the first 3 months of the fiscal year and take full advantage of the depreciation allowed.
Ideally, you want to use depreciation as a way to offset your business income each year with a regular deductible expense. If you buy a $50,000 work van, use 100% for business for it's full depreciation lifespan, and placed it into service in January at the start of the year, you could automatically write-off $10,000 a year for 5 years using the straight-line depreciation method. This means you could make $10,000 in gross sales each year and your taxable net profit for the year would be ZERO just because of the depreciation. If you made less than $10,000 the difference would generate a business loss you get to subtract from your income from other businesses or wages from a regular job. If you use the 179 deduction to expense the whole $50,000 in the first year there's nothing to depreciate in the remaining 4 years and you potentially pay more taxes all 4 years until the vehicle reaches the end of it's 5-year lifespan and is replaced.
The tactic for using the 179 deduction (and also special depreciation) to expense most/all of the cost in the first year entered into service comes into play when the business has an unexpected windfall that jacks up the annual profits much higher than what the business typically earns historically. So, if the business typically makes an average of $90,000 a year in net profits year-after-year, then in the current year makes $150,000 in net profits for a lucky occurrence, they would buy new equipment/vehicles near the end of the year and use the 179 deduction to try knocking it back down closer to what they typically earn in order to avoid increasing their taxes.
Sir, YOU actually know what you're talking about. People, including this CZcamsr, talk about buying a car/truck and just writing it off for business as if the IRS doesn't care about people buying nice cars left and right to simply write off. The IRS isn't dumb, not even close. I appreciate you taking the time to not only explain this but giving a text book example like what I remember back in college. I knew his example in that segment of the video was too good to be true instantly. Plus he said the deduction alone offsets your monthly payment (LOL). If this was true, all business owners would be driving Ferraris and Lambos on 2 year leases all the time! Anyway, your example was so good and thorough, I'm saving it so I can re-review when looking at vehicle or equipment purchases for my business. Thank you!
ty for that detail! i needed that.
Thank you for this!! I wish I could find more truthful factual videos on this! These CZcamsrs just want views 😩
@@srice3941 No Problem.
Didn't realize people were able to save my public playlist... They're kind of a mess right now. sorry I haven't had a chance to reorganize things for a while. I see that my Business - Unsorted and Business - Food Trucks, Restaurants, and Catering playlist are the one's you have bookmarked so I take it you are currently looking at your initial business being food-related.
What other info are you looking for? When I get the chance I'll hunt through the mess and try to point out relevant videos I saved to those playlist or provide you an answer here.
@@PGIFilms Oh its no problem! I just like to harbor information lol I was inquiring about more information on this subject but I ran across your playlists and they looked interesting! Where did you find the real info on the Business Vehicles
This is how the rich stay rich. Make your money work for you. Thanks for the knowledge!
Literally
No doubt. Thanks for watching and commenting. Please subscribe if you havent already. Talk to you soon.
Would doing uber qualified or would it have to be your own personal business ?
Only matters if you have to pay in..
Actually the way the rich stay rich isn't knowing the tax code and tricks... They stay rich because they're willing to pay good money to actual experts that know the tax code and accounting rules, etc, etc
You have my mouth literally hanging open!! THANK YOU FOR THIS VIDEO! WOW!
Man I’ve been watching a lot of videos on this subject and you nailed it. You broke it down the way I was looking for! Subscribed!
Great content, I really appreciate your straight forward approach! Keep it up!
Dang dude! That last point on financing the vehicle opened my eyes wide!! Thanks for the info
Thank you!, This is the most useful, beneficial information. I like how you explain everything and not just one sided
Thank you for the video! I have had a passion for credit repair for a long time and I’ve helped a couple of people. I’ve even thought about starting my own business. Listening to you and seeing your passion has lit a 🔥 in me and learning from and using *Linux Tech Corps* . I have watched this video a few times just as motivation. I call it my “Victory Lap” video because you are spreading Nips message by following it! Thank you and keep pushing! Proud of you!
The best video I've found on this subject. Clear and descriptive which is what we need. Great job!
I don't know why CZcams recommended your page to me but I'm glad they did because I'm a new business and I purchased a new SUV in 2020. Thank you for all the information provided.
Wait how? I went to a dealership and they said since it's my first car I gotta be personal guarantee
I learned some things! Thank you! I also thought your pace was great. I was able to comprehend what you were teaching. So many videos go so fast I can't keep up. Liked, commented and subscribed!
Hello. Thanks for watching and thanks for the comment. I really appreciate it.
One of the best explaination of this subject I have seen online. I am so tired of trying to explain this to friends who know almost nothing about business and taxes. Now I can send this link to them and save my breath. Thanks Bruh
Preach Bruh! So happy I came across your video! During the pandemic I wanted to rebuild my credit so bad and have a new life by the end of this year that would benefit me , my family and my business I opened during the pandemic! I paid someone over $1000 to rebuild my credit and they started the process but ghosted me! I started doing my own research and Linux Tech Corps popped up on CZcams ! I’m now building my own credit back up and I have 3 medical collection’s account to take care of and thanks to you , I know I can handle those! *Linux Tech Corps* were so useful and You’re such a blessing!
Thank you for the info. I have shared this with over ok be hundred clients. Awesome job.
Thank you for watching. Please subscribe to the channel if you haven't already.
Much appreciated knowledge brotha
Totally Appreciate this type of discussion with clarity and fullness from my African American family… I don’t write this lightly. Thank you for sharing your knowledge… in completion. I finally took a tax class in late 2020 and know you speak True and In Full. Blessings to for you and your endeavors! Wahoo
Good info. I hardly ever comment or subscribe, but you got me to do it this time. I’ll be purchasing, God willing, a big rig Peterbilt for $175K in beginning of March. Will be paying cash. Been looking for ways to mitigate the cost and found your video very helpful. Wish you had an office here in Houston TX. Best of luck and you definitely deserve more subs. Peace!
I wish I had this education during the many years I owned my business. Thanks for a great video!🌷
Thank you! First time listener and I appreciate the information! Knowledge is powerful
So happy I came across your video!!! Grateful appreciate this info and your thorough explanations. 👍🏼
I here because my model x and I need that write off! Thanks for helping out ✊🏿
I’m so glad I found this page
This was very informative..thank you.. Keep those golden nuggets coming..True knowledge to prosper.👍
One just have to start and never quit
Well said ! this is something I'm no longer scared to look into and make the next move for the better...
Instant DMV subscriber bro lol I started 3 businesses a year ago and been building biz credit ever since. Yeah I'm so glad I came across your channel because I'm about ready to purchase under my biz EIN.
Thank you Earl. You can do it! Please let us know in the comments how it turns out.
Knowledge is power, thanks for the basic simple breakdown for the working plebs.
I love this information starting my own business
Brother you just got me my dream truck!! Thank you!!
This was awesome information. Thank you for your wisdom Corey!
Thank you for watching. Please subscribe to the channel if you havent already. Have a great weekend.
A when you said "aaaahhhh you didn’t think of that one" bro I almost fell out my seat!!!! I was saying I like this guy channel!!!! Thanks my Guy!!! Definitely subscribe
Thank you and thanks for watching!
😂😂having fun while giving that knowledge.
I needed to see this video. Thanks bro! 🙌🏾🙌🏾🙌🏾
I’m an EA in Maryland! I liked your video. Great explanation of the credit.
Good points but remember that you still need enough income to offset the deduction and it’s still money out of your pocket/business. In this age of COVID, conserving cash is a prudent move for many because cash will be king for a while!
Purchase car threw Businesses or personal loans,?
Thanks for saying this. It is absolutely still at first, a full expense. For some reason ppl act like a write off is somehow the same as not spending money. This misconception must end.
No shade to the channel but this is what most financial channels don’t speak on. You could have 100k in credit on a card but if you can’t pay it back on time the deductions aren’t even worth discussing lol
Yes exactly, at the end of the day it’s still an expenditure, and a hefty one at that.
Thank you so much for explaining this, you're very kind to share . God Bless you!
The monthly payment option is DOPE!! OM!!
This was so easy & simple to understand. Thank you.
Loved the video and humor. Subbed! Thanks for the content.
Great video, solid information. I would suggest a small iPad driven prompter, will make your videos even better.
I needed this video in my life !! I soooooo appreciate your knowledge and willingness to share!! THANK YOU!
Building wealth-
Thank you and thanks for watching. Please subscribe if you havent already done so.
@@CWHankerson subscribed & shared 3 times in less than 24 hours! Blessings to you!
Good info. Thanks for dropping that gem.
Thanks for watching. Please subscribe to the channel of you haven't already done so.
NICE JOB MAN! REALLY GOOD VIDEO
had to watch it on 2x speed but it was still good lol
Nobody ever explained this either in schools nor any of my friends that own businesses🤔
@Moralmente Correcto I bet nobody ever explained to you how to become a surgeon either. If you want knowledge in most things you have to actively seek it out.
This kind of highly complicated tax code would not be explained in either high schools or upper education at all. Accountants and tax preparers would know this information.
@@acerockollaa they actually used to teach all of this up through the late 80’s.
@@mediamanM best comment! You are correct
Bro this is amazing info I just started my business... thanks
How's ur business doing right now?
Thanks for making taxes somewhat bearable to listen to.
Just a few minutes into this and I am getting you and subscribing to your channel. This is unusual for me and says a lot about your content 👍
“Here’s what that means “ 😂 so helpful
well put together, Thank you.
Thank you for watching and I appreciate the comment.
Loved it! Had to like and subscribe keep spreading the info
Thank you!!, your info was soooo helpful!
Keep doing what you do, we need more content like this in the world.
I assume the 3rd strategy also applies with Lease vehicles ? Thank you for the 900IQ plays man, I appreciate you sharing your knowledge !
Very nice. I'll join your channel completely based on this one video. Keep up the good work.
This was great. Liked and subscribed. Keep it up!
U just gave me a whole lot of nuggets so ima subscribe, cos I wanna enlarge my tent
I’m a Maryland resident as well. It’s great to hear that you’re a fellow Maryland native. I started a business recently and I plan on purchasing a “lightweight” SUV under the business name. Although, I’ve already been pre - approved via personal credit.
That’s great
I’m also a MD resident I’m
Going to make an appointment with this fine gentleman 😂
Great video brother! Thank you very much!
Thanks Brother...much appreciated! Great work.
Lease an X7 BMW under your business. Write off the monthly lease payments & insurance. Simple. Either you're paying Uncle Sam that money or your paying for a car with it. I'd rather use the money for the car!
@James Dempsey no, you don’t have to make a lot
@@8FigureEarner619 25k.
@@consciousnessinabody Your tax liability has to be at least 25K. YOu can not take 179 to get to a loss. But if that might happen, one can write off less than 25K first year and carry the remaining to the following 4 years.
@@danielkim672 Thank you for your input Daniel, I am currently in the process of starting my own business and learning as much as I can.
@@danielkim672 nice tip
You know what you’re doing and I love you for it! I needed you to broadcast this gospel for SMEs. Bless you l! Doing the lord’s work 🙌
Thank you! Thanks for watching the video.
Yeah but his diplomas are backwards..lol
The info/content is phenomenal!
This popped on my suggestions, and I am in MD too. Alright, I see you, and hope to see you in person one day too! Commenting for the algorithm :)
Keep spreading knowledge my. Brother 🤟
Always! And thank you for watching.
I appreciate this information greatly. I Just recently started my business and got my Llc.. I was hoping To get more guidelines on taxes and business credit.. I too live in Maryland(Germantown). Would greatly appreciate it if I could sit down with you and learn so I can grow my business
Awesome video!! Perfect timing to. Subscribed!
Thank you so much, your knowledge is greatly appreciated
This was right on time King #universe
It was lightweight shameless, but well played Sir. I subscribed. LOL
thank you so much this was super helpful
Thanks for sharing your knowledge! Props!
So excited to find your channel, Corey!! ❤️🌈🇺🇸🙏
Thanks for watching and welcome aboard!
Tax deduction of 25k does not mean you’re getting 25k into your pocket. Therefore, it doesn’t make sense it will cover for 24 months of $925/month payment.
Your awesome bro!
Thank you for the wisdom and enthusiasm much appreciated I been in business for 3 years now and trying to get it together !
Thank you once again for the knowledge. Many blessings 🙏🏽
Thanks for the comment Edward and thank you for watching. Please subscribe to the channel if you havent already.
I am deciding on buying a work truck and decided to watch this video. Glad I searched this video.
Pull up to the club in my "business" Sprinter shuttle van. That's what I'm talking about! Hehehe. Man you're a genius.
Believe it or not, some of those vans are really really nice inside! Thank you for watching. Please subscribe to the channel if you havent already. Stay safe out there.
I agree! I'm a traveler and want to get one of those to travel the country
Liked and subscribed since your right here with me in MD
😂 VIP table in the van
Do you work with people from out of state?
Corey, you just got you a new subscriber. Love the content. I just started my business this year, 2020. Thank you.
Awesome! Thank you!
@@CWHankerson you're welcome
Thank you soooo much for this info!!!!!!!
Great video Corey
New subscriber here! I have been trying to understand this as I have a new business, and plan to purchase a vehicle. I don't have any business credit and Im in the rebuilding stage of my personal credit. Thank you for this video.
Glad it was helpful!
Bro, 8:06 blew my mind! I had to subscribe just for that. Thanks for the info.
Thanks for watching and Thank you for the sub!
This is great if your business is always making money. I never knew about that capital gains caviat.
Great share thanks I just used your tip for my small business
Love this info. I am an Uber/lyft driver,and starting a clothing line as well. This will help tremendously.
Solid Video! I enjoyed watching this one and appreciate the information.
Thanks for watching!
This is insane haah. love it! thank you man!
Thank you kindly for sharing this information
Fire!!! Blew my mind 🤯
FINALLY somebody actually answered my question. You have to actually OWE the amount your writing off in business tax to benefit from the 179. These other channels make it sound like you get a refund check for the writeoff amount.
Interesting. I did this in 1986 with my wife's Toyota van. Back when I was doing our taxes manually. Worked out OK, no audit!
Why would they Audit
@@CoolKid-yr7tj Because I expensed the cost of the van - $12K. Based on my reading of the rules it should have been OK, but it was a pretty large deduction.
Thanks for the knowledge
Thank you for the video! I have had a passion for credit repair for a long time and I’ve helped a couple of people. I’ve even thought about starting my own business. Listening to you and seeing your passion has lit a 🔥 in me and learning from and using *850 financial assessment* . I have watched this video a few times just as motivation. I call it my “Victory Lap” video because you are spreading Nips message by following it! Thank you and keep pushing! Proud of you!
I’d love your help. I’ve never had credit but can’t seem to get it and I want to start my businesses.
Great video, but you have to do an update Boss. It's not just $25k, you can once again deduct 100% of the value through section 168(k) BONUS DEPRECIATION. I'll be looking forward to that vid...
NOT ALL THE STATES CONFORM BONUS DEPRECIATION, FOR EXAMPLE CALIFORNIA. SEC.179 IS FOR ALL
VIRGINIA allows the Bonus Depreciation 👍. Therefore 100% of the value can be deducted!!👍👍👍
@@feixie8990 Not all states conform to Section 179... Each state takes a position on Section 179 and Bonus Depreciation conformity. States conformity is really a secondary consideration, given most state income taxes range from 5-10%, while the federal rate is almost 40% for individuals.
Great Video bro ... We as Black People need to know this powerful information... Thanks
???
The information shared here is publicly available. No one is hiding this...glad to have outlets like this to drive awareness!
@hotimports411 I’m white and didn’t know this
@hotimports411 sounds racist to make a blanket statement on behalf of white people just because of their skin tone, wouldn’t you agree?🤔
Thanks for making everything so plain.
Super helpful-thank you, Sir!
You explained this so well!! Even this blonde understands 😂😂. Thank you sir!!
Thank you. Thanks for watching.
Is that natural blond ?
Thick lil, brenda
Don't add to the narrative hun
@@eastfinest8671 - very disturbing that she tried. The gig is UP!
There is bonus depreciation too
My hat off to you Corey, great video sir!
Great content .Subscribed.Thank you.
Most clear-headed explanation of Section 179 I've come across. I watched several videos before this and I came off more confused than enlightened. You changed all of that. Question - I'm planning to purchase a vehicle to rent out in Turo. Can Section 179 be applied to that?
Hello Vanessa thank you for watching. I dont see anything that would prevent you from using 179 in the scenario you described. Sounds like a good plan!
Section 179 works for that
@@CWHankerson Thanks for ANSWERING that question-that was the my question also. Thank You Again for simplifying things.
179 is a write off for your depreciation, you can also write off the other expenses like insurance, car wash, car registration, maintenance such as oil change, battery, tires.
@@CWHankerson This answer seems wrong because of following restriction. - Assets purchased and placed in service that are used to generate “rental” Income