Where Is The Section 179 Deduction Part In Self-Employed?

[Celt4Christ]

Hello-

I am a contractor who works in sales, and I'm attempting to finish my taxes for 2021.  Last September, I bought a new truck by taking a loan out.  I have signed up for TurboTax Self-Employed, and I'm wanting to take the Section 179 Deduction for the vehicle.

However, I'm stumped.  I can't find where I can put this info in on Self-Employed.  There's a part that asks me about a carry-over for 2020 or something.  But I can't find where I'm supposed to put in the value of my vehicle and claim the Section 179 deduction as it is a business asset.

Can you please help me?  Thank you in advance!

[Mike9241]

do you get a w-2 or 1099?     as an employee (w-2) you are not self-employed so the use of a vehicle in your line of work would not entitle you to any deduction. if you get a 1099 you should come across a question in the self-employed section about car and truck expenses. you enter the cost of the asset and certain other details.

[Celt4Christ]

I get a 1099-NEC, along with a W-2 since I have two jobs.  And I thought the same thing.  But during the process where I was entering in my vehicle information, it asked me about mileage, but even though I answered the questions, I chose to put in actual expenses since I know that's what's need to claim Section 179.  And when I started putting in actual expenses, it had me put in the full price of the vehicle and all the particulars, but it never brought up Section 179.

The only time it brought up anything about Section 179 was when it asked about the carryover for 2020.  And if I did a search and had TurboTax bring me to the section about 179, it still brought me only to the carryover part.

Did I maybe misunderstand this section?  Instead of 2020, do I actually put in the vehicle expense anyway?  I bought the truck in 2021 in the month of September.

Here is a screenshot:

Is this the spot?  Or is there another place elsewhere in the vehicle section?

[JamesG1]

You will have to enter the actual expenses for the vehicle for you to depreciate the vehicle or claim the section 179 deduction.

In TurboTax Online Self-employed, at the screen How much do you want to deduct for the business use of this vehicle?, select the amount of Section 179 Deduction that you wish to claim.  This screen follow the screen where you enter the cost of the vehicle.

The total cost you can deduct is limited to your taxable income from the active conduct of a trade or business during the year.  If your tax return does not qualify for the section 179 deduction, this option will not be available at the page.

To qualify for a Section 179 deduction, the asset must be:

• Tangible (you're able to touch it, which excludes intangible assets like patents or copyrights)
• Purchased (not leased) for business use
• Used more than 50% in your business
• Placed in service (purchased, acquired, or converted to business use) during the current tax year
• Acquired from a non-related party

Under the rules of a Section 179 deduction, you must retain business use of the asset until the end of its useful life. If that is not possible, you must pay back part of the deduction as a Section 179 recapture.

@Celt4Christ

[Celt4Christ]

Wow, thanks.  I actually didn't know I would have to keep it until it couldn't go any more.  I was planning on trading it in sooner rather than later since I'd been putting so many miles on it.

I certainly have used it more than 50%.  But you're saying that, if I trade the truck in while it's still usable, I will have to pay back the value that hadn't depreciated?  How so?  Wouldn't it just put me in a different tax bracket?  You mean, pay back what I might have gotten back on it?

[Celt4Christ · Accepted solution]

I wanted to let you all know that I figured out where in the process one must go to file the Section 179 Deduction for a vehicle in the TurboTax Self-Employed walk-through process:

Indeed, it is in the income section after you create your section for self-employed income.  However, it doesn't just pop-up naturally as you go through the "Vehicle" section because apparently it's based off the job you choose.  If I chose "Truck Driver", it would pop up, but I chose "Sales" since that's what my job is, and it doesn't naturally come about when you choose this.  And even though I am a travelling salesman and consultant, the program didn't ask me to specify.

So that being said, what you would need to do in this situation is add an "Asset" section and put the value of your vehicle there.  And even though it says "Don't include your vehicle", you have to ignore that and go through to where you can choose "Equipment".  And then you'll be able to put in either the full value or the partial value of your vehicle and choose the depreciation period.  I know that this is the accurate way to do it because I requested a call from TurboTax directly, and a representative walked me through the process.

So there we are!  I hope this assists others in the future who are looking to file a Section 179 Deduction for their vehicle but, as first-timers, are stumped as to how to do it.  Who knows?  Maybe TurboTax will update their algorithms in the future and make it to where this will come about naturally by including unique job options like a travelling salesman.

Hope this helps!  Thanks to all who participated in this question and reviewed it.  And thanks to the TurboTax rep for her awesome help!  Much obliged!

[arlenefernandez]

Thanks for your research and for sharing the info.  I have a question, once you added the car into the Asset section, do you also add the car in the Vehicle section under the Business Expense to use other expenses as additional deductions?

[PatriciaV]

No, enter the vehicle information under Vehicle section of your business (cars, trucks, and other vehicle expenses). Do not enter this as an asset - the advice given back last year was incorrect.

If you want to claim Section 179 depreciation, be sure to choose Actual Expenses and not the Standard Mileage deduction.

@arlenefernandez 

[arlenefernandez]

Thank you Patricia!  But when I do that I was not able to deduct the full amount.  Only if I add it in the asset section I was able to deduct the full amount.  Are we not able to deduct the entire cost instead of depreciating over multiple years per Section 179

[arlenefernandez]

here's another 1 expert answer I saw:

[AmyC]

You normally enter an asset to claim depreciation. Once there, you can choose regular or use the Sec 179 to write off a larger amount than standard depreciation. 

Once you choose the path of depreciation, you must use actual expenses for the gas, oil, etc in the vehicle section. Select Actual every time and you must continue to use it each year.

[arlenefernandez]

Thanks AmyC!  Just to be absolutely sure I understand your response.  So I will need to enter the car under Business Asset and also enter it under vehicle expense?  Once I do the car will appear in Form 4562 twice.   

[AmyC]

Oh, no!  I am so sorry. A vehicle has a limitation on Sec 179 of $19,200. See Publication 946 (2022), How To Depreciate Property - IRS.

You need to remove the Lexus 2022 entry completely. I am so glad you checked back and apologize.

[JLPo]

Could you please update this for tax year 2022. I cannot for the life of me find how to list my new to me truck in Section 179.

[RobertB4444]

Everything in this thread is about tax year 2022.  You will enter the truck into the self-employed business section of TurboTax under car and truck expenses.

@JLPo