Write-Off

T

ToddW

New member
Those of you who do mobile detailing were you able to writeoff the entire value of your vehicle or how does this work?



I recently got a new truck and do some mobile detailing and computer repair and have written off all my computer parts and website products in the past but a vehicle writeoff is new to me.



Thanks

-Todd
 
I believe there are two ways to write off a vehicle. One is to depreciate the vehicle over so many years, which a percentage is writen off each year. The other is to deduct mileage. I believe its around 30 cents per mile. If you drive a ton of miles it is well worth it. You can deduct the mileage every year you own the vehicle. You can only depreciate the vehicle i think for 3-4 years. You cant do both and once you pick which way your going to use you can't change it for as long as you own the vehicle.

Last year, 2004, the government allowed you to depreciate i believe 80% of the vehicle for that year allowing a nice write off for that tax year. Check with an accountant for any current incentives.



**Remember fuel and repairs can be writen off seperately!! :xyxthumbs

Always keep your reciepts!

Dont forget parking garage fees, tolls,truck or car accessories related to your business.
 
Maybe I misunderstood, but I was under the impression from my tax accountant that you could write off the gas and repairs OR you could deduct mileage, but not both. Also, there was a post I think at MobileWorks website stating that the mileage rate has been raised from $.40 a mile to $.48 I think. I'll check back with my accountant and mobileworks to confirm both.
 
I just go by mileage. Real easy and something I can plan on each year. I average around 10,000 miles a year detailing. Most of my customers are close but I have a few in outlying areas, so just one round trip ends up being 80 miles. Of course, I only travel when they have a big job for me to do.
 
Intercooled said:
I believe there are two ways to write off a vehicle. One is to depreciate the vehicle over so many years, which a percentage is writen off each year. The other is to deduct mileage. I believe its around 30 cents per mile. If you drive a ton of miles it is well worth it. You can deduct the mileage every year you own the vehicle. You can only depreciate the vehicle i think for 3-4 years. You cant do both and once you pick which way your going to use you can't change it for as long as you own the vehicle.

Last year, 2004, the government allowed you to depreciate i believe 80% of the vehicle for that year allowing a nice write off for that tax year. Check with an accountant for any current incentives.



**Remember fuel and repairs can be writen off seperately!! :xyxthumbs

Always keep your reciepts!

Dont forget parking garage fees, tolls,truck or car accessories related to your business.
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So you're saying I can deduct my mileage (instead of depreciation) AND deduct my gas and repairs??? Or is it one method or the other but not both of them? Thanks...I know it's probably very simple, but it all seems complicated to me.
 
You have to have a business licence to do this right? Also, what if you dont have that much taxes and have more right off then taxes. Do you get a check for the rest of the right off? And what about products you use on a car?
 
Pontman43 said:
You have to have a business licence to do this right? Also, what if you dont have that much taxes and have more right off then taxes. Do you get a check for the rest of the right off? And what about products you use on a car?
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Business License- Depends on the state you live in, and what you ARE writing off.

10,000 miles x .48 per mile is only $4800. This may seem like a lot but if you are traveling this much for "work" I can almost guarantee your taxes will be more, but a business can be in the - for up to 5 years (I don't know of this is FED or CA only). If you write-off more than you make you come out $0 you don't get money back you just have to start showing a profit or they wonder if you are 'for real' and you may get audited. You can write-off anything to do with your business... products, websites, flyers, business cards, the clothes you use since they are not your 'everyday' clothes ;).



I`m already self-employed, and by doing some side-jobs and being able to either write-off my mileage or depreciate my vehicle drastically helps with the new vehicle cost and/or tax I will owe next year.



I do mobile computer repair and mobile detailing(rarely) so my mileage ads up even quicker... the problem is if I only show $2,000 gross from mobile repair, and detailing combined and the rest from my website business and yet I write-off 10,000 miles they may question me they may not. Quicken has a guide to the "average" for your business category... problem is people like me who dabble into a lot don't really fit in the "BOX" of average.



I`m in California, and last year I didn't have a business license (Don't even have mine this year yet) so I simply write stuff off in my name since that's my "Business". Basically a business license for yourself in CA just shows you paid your dues to run your business, now a DBA for a sole prop. in CA will allow you to get checks cashed in your biz. name but isn't even required. I think last year I wrote off 500 miles.



If your write offs are NOT proportional to your gross income you run a higher risk of being audited. $10,000 expenses does not mean $10,000 off your taxes it means $10,000 will be deducted from your gross to get your net. You are taxed on your net.



*DISCLAIMER*

The above is for entertainment purposes only.
 
I moonlight doing taxes during that season, so I'm as qualified as anyone to comment on this. You can deduct either vehicle expenses OR mileage directly related to your business. If half your annual mileage is personal you can only deduct the other half of expenses or mileage. Vehicle expenses include depreciation, gas, tags, oil changes, reapairs, tires, insurance, signs, etc. If you decide on mileage, then you cannot deduct any of the above expenses. If you use the vehicle for any personal mileage, then you need to keep a daily log of either the personal use or the business use, rough estimates do not fly during an audit. Depreciation is a slippery slope because when you sell the vehicle, the sale price (asset salvage value) gets counted back as income in the year you sell it. Personally, life is much easier if go the mileage route instead of expenses, though there are exceptions.



Also, the mileage rate for the IRS is $0.405 for any miles before September 1, 2005 and $0.485 for any miles September 1 onward, not $0.48 for the whole year.



I haven't touched on any other business expenses (business licenses, advertising, flyers, business cards, uniforms, etc) because they have nothing to do with vehicle deductions, keep them separate when deciding which way to go: expenses or mileage. Your total expenses get deducted from your income and the net is subject to federal, state if applicable, and social security / medicare taxes.



If you have a garage used exclusively for your business (and in theory are properly licensed to conduct business out of your home), you can deduct a portion of your motgage , utilities, etc that is proportional to the size of your home. Same goes for a home office that is used exclusively for your business with certain rules and limitations.



If you are showing greater expenses than income for 3 out of 5 years, the IRS assumes that this is a hobby and frowns upon you attempting to write off a hobby.



Tax preparation is not for the weak of heart and is best left to the professionals that can do it more efficiently. You could spend an entire weekend searching the IRS website instead of detailing one car in a half a day to pay someone to do it for you. I personally hate it and charge more when I get a shoebox full of unorganized (or unrelated) reciepts as it takes longer to sift through it all.



But, if you're inclined, I'd start off with this link for the IRS FAQ for small business: http://www.irs.gov/businesses/small/article/0,,id=135419,00.html



Good luck!
 
Thanks Louie! That's basically the same answer I got from my accountant. I didn't think you could deduct mileage and gas/repairs...it had to be one or the other. Great info. Thanks again.



Matt
 
I just learned a bit here. Sorry if I confused some. I always depreciate and write off all repairs and fuel etc. I didn't know you couldn't do that if you elected to use the mileage deduction. :nervous:
 
Intercooled said:
I just learned a bit here. Sorry if I confused some. I always depreciate and write off all repairs and fuel etc. I didn't know you couldn't do that if you elected to use the mileage deduction. :nervous:
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No problem. Besides, I would've taken it if they were givin it! :grinno: Oh well, I guess mileage it is. Pretty cool they've decided to bump the rate.
 
SilverLine said:
No problem. Besides, I would've taken it if they were givin it! :grinno: Oh well, I guess mileage it is. Pretty cool they've decided to bump the rate.
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Trust me, you're paying for it up front at the gas pump. :scared:
 
I guess it's better than nothing. Gas prices are finally starting to decline here from about $3.40 for the last couple of weeks to about $2.79 when I filled up today. It's sad when your excited to see gas "this cheap" HaHa. Price of doing business I suppose.
 
SilverLine said:
I guess it's better than nothing. Gas prices are finally starting to decline here from about $3.40 for the last couple of weeks to about $2.79 when I filled up today. It's sad when your excited to see gas "this cheap" HaHa. Price of doing business I suppose.
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I know what you mean. Doesn't seem that long agao I was crying about having to pay $2.00/gal., and now I wish it were as cheap as $2.00/gal. Doesn't help when I own a Navigator and a GT Mustang either. :bawling:
 
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