Calculating Tax Savings for SUV Purchase with Section 179 and Bonus Depreciation

12 Wait I'm confused about combining them. Can you actually use both Section 179 AND bonus depreciation on the same vehicle? I thought it was one or the other? Also, isn't bonus depreciation supposed to be 80% for 2024 not 60%?

7 Yes, you can actually combine Section 179 and bonus depreciation on the same asset, but you apply Section 179 first, then bonus depreciation on the remaining basis. You're right about the bonus depreciation percentage - I apologize for the error. For property placed in service during 2024, bonus depreciation is 80% (not 60%). So the calculation would be: $26,000 under Section 179, plus bonus depreciation of 80% on the remaining amount ($78,000 - $26,000 = $52,000 × 80% = $41,600). Total first-year deduction: $67,600. At 35% tax bracket, that's about $23,660 in tax savings.

8 Does taxr.ai actually tell you how to fill out the specific IRS forms? I've been burned before by tax software that gives general advice but doesn't show exactly which line items to use on Form 4562.

19 I'm skeptical that any software could really understand all the nuances of section 179 and vehicle depreciation. What about the recapture rules if you don't maintain 100% business use? Does it handle that too?

14 Yes, it actually shows you exactly which lines to complete on Form 4562 for Depreciation and Amortization, with specific guidance for the Section 179 and Special Depreciation Allowance sections. It even generates a preview of the completed form based on your inputs. Regarding recapture rules, it absolutely addresses that. The software includes a business use tracker that warns you about potential recapture taxes if your business use drops below certain thresholds in subsequent years. It even calculates the estimated recapture amount you'd owe if your usage changed from 100% to say, 70% in year two.

5 How does Claimyr actually work? Do they just call the IRS for you or what? Seems weird that they could get through when nobody else can.

9 This sounds like a scam. Why would I pay someone else to call the IRS when I can just keep trying myself? And how do they magically get through when millions of others can't? I'll believe it when I see it.

3 They don't call for you - they use technology to navigate the IRS phone system and hold in line for you. When they reach a human agent, they call you and connect you directly to that agent. They use a combination of automated systems that can navigate the IRS phone trees and stay on hold so you don't have to. They've basically figured out the optimal times to call and which menu options have the shortest wait times for different departments. Once they get through to an actual person, they immediately connect you to take over the call. I was skeptical too but it works incredibly well - saved me literally hours of frustration.

21 Do you know if there's a specific income-to-vehicle ratio they look for? I'm a real estate agent making about $120k/year and want to deduct an $80k SUV. Is that reasonable or asking for audit trouble?

16 There's no specific formula or ratio the IRS publishes, but they do look at whether the vehicle expense is reasonable compared to your business type and income. For real estate agents, luxury vehicles are pretty common and justified since you're transporting clients. At $120k income with an $80k vehicle, you're probably fine as long as you can demonstrate legitimate business use and maintain proper documentation. Real estate is one of those professions where a nicer vehicle is often expected and can be justified as ordinary and necessary. Just make sure you keep a detailed mileage log and document all business usage.

24 Which states DO fully conform with the federal rules? I'm in Texas so I don't have state income tax, but I'm curious about how this works in other states.

Most states that don't have their own income tax (like Texas, Florida, Nevada, etc.) obviously don't have conformity issues. Among states with income tax, it varies widely. Some states like Arizona and Colorado generally conform to federal depreciation rules, while others like California and New York have their own rules that can differ significantly from federal treatment. New York, for example, has decoupling provisions that can limit bonus depreciation. Illinois has had on-and-off conformity with federal bonus depreciation over the years. Your best bet is to check with a tax professional familiar with your specific state's rules, since this can really impact your overall tax strategy for a large purchase like this.

This is really helpful advice! I had no idea about the GVWR vs actual weight distinction. As someone new to business vehicle deductions, could you clarify what specific documents I should be keeping for the IRS? You mentioned mileage logs and receipts, but are there any other records that are commonly overlooked? I want to make sure I'm bulletproof if they ever decide to audit my SUV purchase.

Great question! Beyond mileage logs and receipts, here are some commonly overlooked documentation requirements: 1. **Business purpose documentation** - For each trip, note the specific business purpose (client meeting, site visit, etc.), not just "business use" 2. **Purchase documentation** - Keep the original purchase agreement, financing documents, and title showing the exact GVWR 3. **Contemporaneous records** - Your mileage log needs to be kept in real-time, not reconstructed later. The IRS can reject logs that look like they were created after the fact 4. **Mixed-use allocation** - If you use the vehicle for both business and personal, document your methodology for determining the business percentage 5. **Form 4562 election statements** - Keep copies showing exactly which depreciation method you elected and when 6. **Insurance and registration** - Keep records showing the vehicle is registered to your business (if applicable) The key is consistency and contemporaneous record-keeping. Many people get tripped up trying to recreate records months later when preparing taxes. Start your documentation system the day you buy the vehicle!