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jimbob72
Returning Member

MACRS deprecition car deduction

File jointly

Wife has w-2 wages

I have 1099 as sole prop. & w-2 wages from direct work

Does new car deduction for sole prop deduct from total reported income (spouse w2, company w2 & 1099 sole Prop.)?

Car used 80% for 1099 work

2019 year bulk of income is from w2's next year 50% from spouse & rest 1099 from my consulting

5 Replies
DoninGA
Level 15

MACRS deprecition car deduction

Depreciation of a vehicle used in business is only entered as an expense for the business.

jimbob72
Returning Member

MACRS deprecition car deduction

if new business and 1099 income is less then the new car depreciation limit (18K X.8 usage). 14.400.00

1. can I use the full 1st yr bonus depreciation of 14.4K ?

   - That generates a business loss

2. does that loss carry over to combined income  (w2 ) and reduces the overall taxable income?

3. or can you only use up to the income number

 

For ex. (simplified) would it work like:

new business 1009 is 2500.00

car deprecation allowance 14,400 - special 1st yr bonus deprecation based on usage

net results  loss(11,900)

w2 wages 80,000 - wife and mine prev. work w2

1040 net income 80k-11.9lk loss or 68.100.00

 

 

 

 

DoninGA
Level 15

MACRS deprecition car deduction

The business net loss or net profit either decreases or increases your total gross income entered on Form 1040 Line 6.

Anonymous
Not applicable

MACRS deprecition car deduction

the schedule C loss (gross income less expenses including depreciation )    will offset the W-2 wages. 

 

 

 

 

 

but here's the thing. you will have a schedule c loss of $11,900 for 2019 and thus pay no Self-employment tax.   However, this loss can not be carried over to 2020 to offset self employment income in that year   so if you had no W-2 wages in 2020 and $11,900 in net se income you will pay se tax of about $1,700 in addition to regular income taxes.       

 

 

jimbob72
Returning Member

MACRS deprecition car deduction

yes that was what i was seeing. thnak you

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