Isn't it double dipping to fully depreciate a semi truck while still deducting loan payments?

Wait I'm confused. So if I bought a truck for $150,000 and I take the Section 179 deduction for the full amount in year one, I can still deduct the interest on my payments? What about if I'm leasing instead of buying? Asking cause I'm about to get a new rig.

Yes, you can absolutely take Section 179 on the purchase price of the truck (up to the annual limits) and still deduct the interest portion of your loan payments as a separate business expense. The principal is part of the purchase price that you're depreciating, but the interest is a financing cost that's always deductible. For leasing, it's different - since you don't own the asset, you can't depreciate it. Instead, you deduct the entire lease payment as a business expense. Leasing sometimes has its own advantages depending on your business situation.

How does that even work? Like does it look at your documents and tell you what's wrong or do you have to already know what your looking for? My tax situation with my owner-operator business is getting complicated.

Sounds too good to be true tbh. I've used TurboTax for years and it still misses stuff. How's some website gonna figure out something my accountant couldn't?

It works by uploading your tax documents and loan statements, and their AI analyzes everything to spot these kinds of issues. You don't need to know what you're looking for - it flags potential problems and explains them in simple terms. For trucking businesses, it specifically checks for common issues like depreciation vs. loan payment deductions. As for how it catches things other systems miss, it's specifically designed to look for these transportation industry issues. Regular tax software treats everyone the same, but trucking has very specific rules about equipment depreciation, per diems, and maintenance that general tax programs often miss.

Wait you can actually get the IRS to call you back? I've literally spent like 5 hours on hold trying to ask questions about my truck depreciation. Does this actually work?

Yeah right... So you're telling me some service can magically make the IRS call you when they won't answer their own phones? I've been trying for weeks to get someone about my amended return from my trucking business and nothing. Sounds like snake oil.

Yes, they use some kind of priority system that gets you in the callback queue. I don't know the technical details of how they do it, but they basically navigate the IRS phone tree for you and when they get close to an agent, they switch the call over to your phone. That's why you get a call within about 15-30 minutes instead of waiting for hours yourself. I was skeptical too until I used it. The IRS isn't calling you directly - Claimyr gets you to the front of the line and then transfers you when an agent is about to pick up. If you've been trying for weeks, it's definitely worth trying. It saved me from having to take an entire day off just to sit on hold.

So wait, if you use Section 179 to deduct the whole purchase price in year 1, do you get any deduction for the truck in year 2 besides the interest? Like does depreciation still continue or is it all used up?

Once you've used Section 179 to deduct the full purchase price, there's nothing left to depreciate in future years. The only deduction related to the truck financing you can take in following years is the interest portion of your loan payments. You'll still have other truck-related deductions though - maintenance, repairs, fuel, insurance, etc. These are separate operating expenses that you can deduct each year regardless of depreciation.

What tax software do you use that correctly separates these things? I'm using TurboTax Self-Employed and it doesn't seem very clear about how to handle my truck loan vs depreciation.

I've been using FreeTaxUSA for my owner-operator business and it handles truck depreciation pretty well. When you enter your truck purchase, it walks you through Section 179 vs regular depreciation options. For the loan, you have to manually separate the interest from principal using your loan statements, but it's not too complicated once you understand what you're doing. The key is keeping good records of your loan statements so you can pull out just the interest portion each month. Most loan servicers will send you a year-end statement that breaks down total interest paid vs principal, which makes tax time much easier.