Truck Payment

[jereme0512]

Hello, 

Am I able to write off my truck payment? I am the sole person who uses the vehicle and it's used only for my business/my LLC. 

[MaryK4]

No, you cannot write off the truck payment, but you can take a deduction for depreciation (spreads the deductible amount over years) or the standard mileage deduction.  You can also deduct the interest portion of the loan- you may have to calculate what part is business interest if you use the truck for both work and personal (just apply a percentage).

[Mike9241]

if that payment is for an installment purchase of the truck you ned to capitalize the total cost of the truck and depreciate it.  the portion representing interest would be deductible the portion paying off the loan is not.  however, if these are lease payments and the lease does not qualify as a capital lease, then the payments would be deductible. a capital lease is treated as a purchase.

[jereme0512]

I ran it both was but didn’t want to do the deprecation way cause it was doing a one time evaluation and was allowing up to $22,000 off but I didn’t purchase my truck for my business I just use it until I save up to buy one strictly for work, when I do the way where it just accounts for mileage and maintenance and other stuff spent on it it’s $9068 off which they still only take a percentage off you total owed, I just didn’t want to get red flagged if it’s way too much especially since I didn’t buy it for 100% work

[KrisD15]

If you use mileage only, the deduction will be 58.5 cents per business mile driven the first half of 2022 and 62.5 cents for the business miles driven the second half of 2022. 

Multiply the mileage by the rate. (.585 or .625)  Only use the miles you drove for business purposes. 

Please be aware that .26 per mile of that is a "Depreciation Equivalent"

What does that mean? 

Although this is not a 100% business vehicle, when you sell the truck, you will need to adjust your basis for the depreciation and claim a income if applicable. 

So if you bought the trunk for 40,000, used it for business purposes for 5000 miles all the second half of 2022, you would expense $3,125, plus other expenses, like toll and parking. (5,000 X .625 = 3125)

If you sell the truck for 38,000 you would have a 1,125 "Depreciation Recapture" which would be ordinary income. Basis less depreciation taken (or could have been taken) equals Adjusted Basis - Selling proceeds  Adjusted less basis equals income) 

(40,000 - 3125 = 36,875          38,000 - 36,875 = 1125)

Vehicles usually don't hold their value, so you may never need to claim any income from depreciation (nor any capital gain) but it's good to know

This would only be something you would need to address when you sell the vehicle, not simply when you stop using it for your business.