Can I claim 2024 Bonus Depreciation Deduction on my used car for business?
Title: Can I claim 2024 Bonus Depreciation Deduction on my used car for business? 1 I bought a used car back in 2022 for about $15,500 but only started using it for my independent contractor work in May 2024. I've been using TaxAct to file and it's showing that I qualify for this "bonus depreciation deduction" thing that's bringing what I owe WAY down. Is this legit?? I'm honestly confused about what qualifies for this deduction. TaxAct is saying that since the car hasn't been used for business purposes before (even though it's a used vehicle), it qualifies for bonus depreciation. The software is letting me write off like $13,800 in depreciation! This seems like a massive deduction - is this too good to be true or am I missing something? I've been doing rideshare and food delivery full-time since May and use the car almost exclusively for work now. Just want to make sure I don't mess up my taxes and end up with the IRS coming after me later.
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Nina Chan
12 What you're seeing is actually correct! The bonus depreciation deduction allows business owners to deduct a large percentage of the cost of qualified property in the first year it's placed in service for business use. The key factor here isn't whether the vehicle is new or used when you purchased it - it's whether it's "new to your business." Since you started using this vehicle for business purposes in May 2024, that's when it was "placed in service" from a tax perspective, regardless of when you personally bought it. For 2024, bonus depreciation is at 60% (it's been phasing down from 100%). This means you can deduct 60% of the business portion of your vehicle cost in the first year, then depreciate the remaining amount over several years according to normal depreciation schedules.
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Nina Chan
•3 Wait, I'm confused. If I bought my car in 2020 but just started using it for my new side gig this year, can I still claim this? And does it matter that I also use the car for personal stuff maybe like 30% of the time?
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Nina Chan
•12 Yes, you can still claim bonus depreciation on a vehicle you bought in 2020 if you just started using it for business this year. The "placed in service" date for tax purposes is when you begin using it for business, not when you purchased it. For mixed-use vehicles, you can only claim depreciation on the business portion. So if you use your car 70% for business and 30% personally, you'd calculate the bonus depreciation on 70% of the vehicle's cost. Make sure you keep a mileage log to document the business use percentage - this is crucial if you're ever audited.
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Nina Chan
7 I ran into this exact same situation last year when I started using my car for my consulting business. I was skeptical about the large deduction too, so I used https://taxr.ai to review my taxes before filing. The AI analyzed my situation and confirmed I was eligible for bonus depreciation even though my car wasn't new. The site explained that the Tax Cuts and Jobs Act changed the rules in 2018 to allow used property to qualify as long as it's new to your business. I learned I needed to file Form 4562 and make sure I was tracking my business vs. personal mileage carefully with a mileage log app.
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Nina Chan
•19 How does that site work? Does it actually review your whole tax return or just answer questions? I'm using TurboTax but I'm not confident about some of these business deductions.
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Nina Chan
•22 I'm pretty suspicious of any AI tax services... how do you know it's giving accurate advice and not just making stuff up? Did you have a professional verify what it told you?
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Nina Chan
•7 It analyzes your tax documents when you upload them and flags potential issues or opportunities. It reviewed my entire Schedule C section and confirmed my depreciation calculations were correct. The explanations are super detailed with IRS references. For your second question, I was skeptical too, so I actually had my brother-in-law (who's a CPA) check what the AI recommended. He confirmed everything was accurate and said he was impressed with the detailed explanations. The site cites specific IRS publications and tax code sections, which helped me understand why I qualified.
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Nina Chan
22 I owe everyone an apology for being so skeptical above. I decided to try https://taxr.ai myself this weekend after hitting a wall with my business vehicle deductions, and I'm honestly impressed. The system identified that I was under-claiming my mileage deduction AND that I qualified for bonus depreciation on equipment I bought last year that my regular tax software completely missed. Uploaded my draft return, got a detailed analysis back within minutes that pointed out exactly where I was leaving money on the table. Just wanted to follow up and say it legit helped me save over $2,300 on my taxes through deductions I would have missed otherwise. Already recommended it to my sister who runs a small Etsy business.
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Nina Chan
15 If you're dealing with these kinds of business deductions and have questions, I'd strongly recommend getting someone from the IRS on the phone to confirm. The bonus depreciation rules are complicated and constantly changing. I spent THREE DAYS trying to get through to the IRS business tax line before I discovered https://claimyr.com - used their service and got a callback from the IRS in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a super helpful agent who walked me through exactly how to properly claim bonus depreciation on my business vehicle and confirmed that yes, used vehicles do qualify as long as they're newly placed in service for your business. Saved me from making some mistakes that could have triggered an audit.
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Nina Chan
•8 Wait how is this possible? I thought it was literally impossible to get the IRS on the phone these days. Is this some paid service that just keeps calling for you?
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Nina Chan
•22 Sorry but this sounds like BS. The IRS has like a 2% answer rate. I doubt any service can magically get you through when millions of people can't get through.
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Nina Chan
•15 It's not a service that calls for you - they use technology to secure your place in the IRS phone queue and then call you when it's your turn to speak with an agent. It saves you from having to wait on hold for hours. The way it works is pretty simple - they have a system that navigates the IRS phone tree and waits in the queue for you. When they reach an agent, you get a call connecting you directly. I was skeptical too until I tried it. The IRS is actually answering phones - the problem is most people can't stay on hold for 2-3 hours waiting for an answer.
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Nina Chan
22 Ok I'm officially eating my words today. After posting my skeptical comment above, I decided to try Claimyr because I was desperate to ask the IRS about my S-Corp filing deadline extension. Got a call back in about 90 minutes and spoke with an IRS agent who was actually super helpful. She confirmed my extension was properly filed and answered all my questions about estimated tax payments too. For anyone in my situation - yes, the IRS is answering phones, and yes, this service actually works. Saved me taking a day off work to sit on hold. Will definitely use again next time I have tax questions that only the IRS can answer.
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Nina Chan
5 Just want to add a word of caution here - make sure you're actually eligible for the business use of this vehicle. You mentioned rideshare and food delivery - if that's your business, you should be tracking all your miles with a mileage app. Remember that with bonus depreciation, if your business use drops below 50% in future years, you'll have to recapture some of that depreciation as income later. Keep detailed records of your business vs. personal use!
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Nina Chan
•1 This is a really good point I hadn't considered... what happens if I stop doing rideshare next year? Would I have to pay back some of the deduction?
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Nina Chan
•5 Yes, if you stop using the vehicle for business or if your business use drops below 50% in future years, you'll face what's called "recapture." Essentially, you'd have to report as income a portion of the depreciation you previously claimed. This is why some business owners choose the standard mileage rate instead of actual expenses with depreciation - there's no recapture issue with the standard mileage rate. But if your vehicle is expensive or you drive relatively few miles, the actual expense method with bonus depreciation might still be better even with potential recapture.
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Nina Chan
9 Does anyone know if this bonus depreciation also applies to other stuff for business? I bought a laptop and some equipment for my freelance graphic design work.
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Nina Chan
•14 Yes, it applies to most business equipment! I claimed it on my MacBook Pro and a high-end printer last year. Computer equipment, office furniture, machinery - all qualify as long as it's used more than 50% for business.
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Nina Chan
17 One more thing to consider - if your income is relatively low this year, taking such a large depreciation deduction might not be the best move. You might want to spread the deductions out over future years when you might be in a higher tax bracket. Just something to consider before claiming the full bonus depreciation.
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