Section 179 deduction for vehicle

[john55]

I bought a vehicle for 100% business use. The cost was $22k. I believe I can take up to $18 deduction. However, when the online application asks how much I want to apply to Section 179, and I enter $18,000, my tax bill goes up. A lot. When I enter zero it goes down a lot.  Why?

[DanielV01]

Change the method you are using.   Rather than use Section 179, what you want to claim is Bonus Depreciation.  This IRS website explains in more detail:  Bonus Depreciation on Vehicles.  You will see this information on the site:

The new law changed depreciation limits for passenger vehicles placed in service after Dec. 31, 2017. If the taxpayer doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is:

• $10,000 for the first year,
• $16,000 for the second year,
• $9,600 for the third year, and
• $5,760 for each later taxable year in the recovery period.

If a taxpayer claims 100 percent bonus depreciation, the greatest allowable depreciation deduction is:

• $18,000 for the first year,
• $16,000 for the second year,
• $9,600 for the third year, and
• $5,760 for each later taxable year in the recovery period.

The new law also removes computer or peripheral equipment from the definition of listed property. This change applies to property placed in service after Dec. 31, 2017.

Section 179 is calculated differently, and is limited to $10,000 on a vehicle.  So to get $18,000, you need to use bonus depreciation.

[smtax99]

Hi:

Where do you find bonus depreciation in Turbo Tax Home and Business 2019?

[KathrynG3]

Go back to your self-employment expenses by following these steps:

1. From Business>Business Income and Expenses>
2. I'll choose what I work on>
3. Business Income an Expenses click Update>
4. Here's the business info we have so far click Edit>
5. Scroll down to Business Vehicle Expense click Update>
6. Vehicle Summary click Edit>
7. Click through the questions and click Yes, when asked if you want actual expenses> Click Continue>
8. Continue to click through the questions and you will get to Do you want to take the Special Depreciation Allowance? Click Yes and continue with the rest of the Vehicle interview.

In Forms Mode, you can see this in summary on the Car & Truck Wks for the vehicle. Part VI will show the Special Depreciation Allowance Details.

[smtax99]

Thank you , this was what I did but only getting 5411 for depreciation.

The brand new car was purchased by the business brand new at 36,000 on April 19,2019 and it should allow up to $19,000; at least $10,000 for special bonus depreciation.

Why is this not the case? Does $36,000 not allow more than $5,411 in speacial +bonus depreciation?

[VictoriaD75]

Did you indicate that the vehicle is used for both business and personal purposes? There is a limit on the depreciation for luxury vehicles. If you use the vehicle for personal purposes, your depreciation deduction will be limited to the business use percentage. 

For new and pre-owned vehicles put into use in 2019 (assuming the vehicle was used 100% for business):

• The maximum first-year depreciation write-off is $10,100, plus up to an additional $8,000 in bonus depreciation.
• For SUVs with loaded vehicle weights over 6,000 pounds, but no more than 14,000 pounds, 100% of the cost can be expensed using bonus depreciation.

Business Use of Vehicles

[smtax99]

Thank you very much.

How do I dedcut depreciation for 2020?

In the business assets, the car is not showing as an asset. (I might have entered it incorrectly for 2019, not sure).

However, when I enter the gasoline etc expenses, the total deduction comes up to be exactly to the sum of these with no extra depreciation expense.

Bought the car for $37K in 2019. Would like to complete depreciation by 2020, i.e take advantage of depreciation this year.

How do I do that?

Can you please help?

Many thanks in advance

[DianeW777]

Yes.  The steps to enter your vehicle are shown below.

For self-employment purposes follow these steps to enter your vehicle for your business.

1. Down the left side, click Federal.
2. Click on Wages & Income.
3. Under Your income, click on Edit/Add to the right of Self-employment income (or business income).
4. Click on Edit next to the business name.
5. To the right of the vehicle expenses, click Edit.
6. Under Vehicle Summary, click Edit to edit the entries.  Click Delete to delete the entries. 

The standard mileage rate for 2020 is 57.5 cents per mile.  Keep in mind that you must use the standard mileage rate the first year a vehicle is placed in service or you can never use it again for that vehicle.