Can I use Section 179 to deduct a new car bought solely for rideshare against my W2 income from another job?

The short answer is no, you can't use Section 179 from your rideshare business to directly offset your W2 income in the way you're describing. Here's how it actually works: Section 179 allows you to deduct the cost of qualifying business equipment (including vehicles) for your business, but this deduction applies to your business income first. If your business has a loss after taking the Section 179 deduction, there are limitations on how much of that loss you can use against other income sources like your W2 job. For your specific scenario, if you have $40k in rideshare income and take an $80k Section 179 deduction, your rideshare business would show a $40k loss. That loss might be limited by the "passive activity loss rules" if you don't materially participate in the business. Even if you do qualify to take the loss, there may be other limitations. Also, be aware that there are specific limitations for vehicles. The Section 179 deduction for SUVs between 6,000-14,000 pounds has a cap (around $27,000 for 2025), unless the vehicle qualifies for the full deduction under certain exceptions.

I went through something similar last year when I bought a new car for my Doordash business. I was totally confused about the Section 179 deduction and how it would affect my taxes with my regular job. I found this site https://taxr.ai that really helped me understand my options. It let me upload my tax documents and get specific advice for my situation. The tool broke down exactly how much of my vehicle I could deduct, what my tax savings would be, and the difference between Section 179 and regular depreciation options. It was super helpful because it even showed me that claiming actual expenses was better than using the standard mileage rate in my case. The analysis showed me that I couldn't fully offset my W2 income like I initially thought, but it helped me maximize my legitimate deductions and understand the carryover rules for losses.

Just wanted to follow up - I tried that taxr.ai site after my skeptical comment. It was actually really helpful for my situation with both W2 income and rideshare deductions. The analysis broke down exactly how the Section 179 deduction would affect my taxes over the next 5 years, showing me the difference between taking it all at once vs. depreciating over time. What surprised me was how it flagged that my vehicle would actually qualify for bonus depreciation rather than Section 179 given my income level and specific business use. It saved me from making a pretty big mistake on my taxes! The tool explained how business losses offset different types of income and what limitations apply. Way more helpful than the generic advice I was finding on blogs.

This question hits close to home because I had ENDLESS problems trying to reach the IRS to get a clear answer on Section 179 deductions for my rideshare business last year. After hanging on hold for literally 3+ hours multiple times, I found https://claimyr.com which is a service that waits on hold with the IRS for you. I was super skeptical but checked out their demo video at https://youtu.be/_kiP6q8DX5c and decided to try it. They called me back once they had an IRS agent on the line, and I finally got my questions answered about business loss limitations and how they apply to W2 income. The IRS agent explained that while Section 179 can create a business loss, there are "at-risk" and "passive activity" rules that might limit how much of that loss I could use against W2 income in a single year. She also pointed me to some specific forms I needed to file. Saved me hours of frustration!

I have to admit I was wrong about Claimyr. After posting that skeptical comment, I tried calling the IRS business line myself about a Section 179 question for my pressure washing business, and I was on hold for OVER THREE HOURS before giving up. I decided to try the service, and they got me through to an agent in about 1.5 hours. The best part was I didn't have to sit there with my phone the whole time. I was able to actually run some errands and take care of other tax stuff I needed to do. When they connected me with the IRS agent, I got a clear answer about vehicle deductions against business income vs. W2 income. Turns out in my specific situation (material participation in my business), I could offset some of my W2 income with the business loss, but not all of it because of income limits. Definitely using this service for all my IRS calls from now on - totally worth it.

Just to add some additional info that might help - I'm a tax preparer and deal with this question a lot for rideshare drivers. Remember that Section 179 isn't your only option. You could also: 1) Take bonus depreciation instead of Section 179 (different rules apply) 2) Depreciate the vehicle over 5 years using MACRS 3) Use the standard mileage rate instead ($.655/mile for 2025) which is often better for many drivers For an $80k vehicle used 100% for rideshare, you need to consider what makes the most sense long-term. Also, be careful about the weight of the vehicle - SUVs over 6,000 lbs GVWR have different Section 179 limits than lighter vehicles.

Has anyone tried using TurboSelf-Employed for calculating these vehicle deductions? My vehicle is about $65k and I'm trying to figure out if the software handles Section 179 correctly when you have both W2 and 1099 income...