topic Re: MACRS deprecition car deduction in Business & farm

MACRS deprecition car deduction

jimbob72 — Tue, 17 Sep 2019 14:04:16 GMT

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

Re: MACRS deprecition car deduction

DoninGA — Tue, 17 Sep 2019 14:32:00 GMT

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

Re: MACRS deprecition car deduction

jimbob72 — Tue, 17 Sep 2019 15:06:21 GMT

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

Re: MACRS deprecition car deduction

DoninGA — Tue, 17 Sep 2019 15:58:52 GMT

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

Re: MACRS deprecition car deduction

Anonymous — Tue, 17 Sep 2019 16:11:48 GMT

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.

Re: MACRS deprecition car deduction

jimbob72 — Tue, 17 Sep 2019 16:25:20 GMT

yes that was what i was seeing. thnak you