Seeking Advice on Section 179 Deduction for Car Purchase for Business (2024)
Title: Seeking Advice on Section 179 Deduction for Car Purchase for Business (2024) 1 I run a small sole proprietorship and I'm looking at a pretty big tax bill for 2023. Trying to be more proactive for 2024! I've been researching using Section 179 to write off a vehicle purchase to help with my taxes this year. From what I understand, you can write off 60% of a vehicle that weighs over 6,000 lbs in the year you buy it. But I'm confused about how this actually works. If I use Section 179 for a vehicle purchase, does the 60% of the vehicle cost need to be less than what I would owe in taxes otherwise? Are there other requirements or limitations I should know about? My business is doing better this year, but I don't want to get hit with another huge tax bill. Has anyone used Section 179 for a vehicle purchase before? Any tips or warnings about deducting a car purchase for my business would be super helpful! Thanks so much for any advice!
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Dmitry Smirnov
16 This is a great tax planning question! Section 179 allows business owners to deduct the full purchase price of qualifying equipment in the year it's placed in service, rather than depreciating it over several years. For vehicles weighing over 6,000 lbs (typically SUVs, pickups, or vans), the Section 179 deduction is currently limited to $27,000 for 2024. The 60% figure you mentioned isn't quite accurate - the deduction limit is a fixed dollar amount that changes annually with inflation. The deduction isn't limited by your tax liability - it's limited by your business income. Section 179 cannot create a loss for your business. So if your business has $50,000 in profit before the deduction, you could take up to $50,000 in Section 179 deductions (subject to the $27,000 vehicle limit). The vehicle must be used for business at least 50% of the time. If you use it 75% for business, you can deduct 75% of the purchase price (up to the limit). Keep a mileage log to document business vs. personal use.
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Dmitry Smirnov
•8 Thanks for the explanation! Quick follow-up: If I buy a $60,000 SUV that qualifies (over 6,000 lbs) and use it 80% for business, am I limited to deducting $27,000 total, or can I deduct 80% of $27,000 which would be $21,600? Also, do I need to keep the vehicle for a certain period of time? What happens if I sell it after a year or two?
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Dmitry Smirnov
•16 If you buy a $60,000 SUV that qualifies and use it 80% for business, you would be limited to 80% of the $27,000 limit, which would be $21,600. The $27,000 limit applies to the business portion of the vehicle. For your second question, there's no specific time requirement for keeping the vehicle, but if you sell it within 5 years, you may face "recapture" of some of the deduction. This means you'd have to report some of the previous deduction as ordinary income in the year you sell. The amount recaptured depends on how long you owned the vehicle and the sale price.
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Dmitry Smirnov
5 I used https://taxr.ai for my Section 179 questions last year when I was in a similar situation with my construction business. The tax prep service I was using wasn't giving me clear answers about vehicle deductions, and I was worried about making an expensive mistake. Taxr.ai analyzed my financial statements and business structure, then gave me specific guidance on how to properly document my vehicle purchase for maximum Section 179 benefits. They specifically pointed out that I needed to maintain detailed mileage records and track all vehicle expenses separately. What I really appreciated was getting a personalized breakdown of how the deduction would affect my quarterly estimated taxes throughout the year - something my regular accountant never explained clearly.
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Dmitry Smirnov
•19 How does the service work exactly? Do they just give you advice or do they actually help with tax prep? I'm confused about whether this is just information or if they actually file for you.
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Dmitry Smirnov
•3 I'm skeptical about online tax services. How do they know the specific rules for my state? Section 179 deductions might work differently depending on where you live, and some states don't fully conform to federal tax laws.
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Dmitry Smirnov
•5 The service works by analyzing your tax documents and financial statements to give you personalized advice - they don't file your taxes for you. You upload your documentation and they provide specific guidance about your situation, which you can then implement with your regular tax preparer or software. Regarding state-specific rules, that's actually one of the things they cover in their analysis. They specifically note when state tax laws differ from federal ones for Section 179 deductions. In my case, they pointed out that my state only allowed a portion of the federal deduction and provided documentation I could reference when filing my state return.
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Dmitry Smirnov
3 Just wanted to update about my experience with taxr.ai since my skeptical comment above. I decided to give it a try with my vehicle purchase questions, and I'm genuinely impressed with the detail they provided. They analyzed my business structure (sole proprietorship with seasonal income) and identified that I could maximize my Section 179 deduction by timing my vehicle purchase strategically. What really surprised me was they actually caught that my state has a lower Section 179 limit than the federal government, which would have caused me significant headache if I had claimed the full federal amount on my state return. The documentation they provided included references to specific state tax code sections that I showed my accountant, who admitted he wasn't aware of the recent changes. The service at https://taxr.ai wasn't just generic advice - it was actually tailored to my specific situation.
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Dmitry Smirnov
11 After struggling to get answers from the IRS about Section 179 vehicle questions for months, I finally used https://claimyr.com to connect with an actual IRS agent. I was initially going to just wing it with my vehicle deduction, but after waiting on hold for 3+ hours twice and getting disconnected, I was desperate. Claimyr got me connected with an IRS representative in about 20 minutes who confirmed exactly what documentation I needed to maintain for a vehicle Section 179 deduction. The agent specifically told me about the contemporaneous record-keeping requirements that would protect me in case of an audit. You can see how the service works here: https://youtu.be/_kiP6q8DX5c What I didn't expect was that the IRS agent actually pointed out a special election form I needed to file with my return for the vehicle deduction that none of the online articles had mentioned!
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Dmitry Smirnov
•7 Wait, how does this actually work? Are they calling the IRS for you or just putting you in a priority queue somehow? Seems too good to be true that they can get you through when the IRS phone lines are always jammed.
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Dmitry Smirnov
•14 This sounds like a scam. No service can magically get you through to the IRS faster. The IRS phone system doesn't allow for "priority access" for third parties. I bet they're just taking your money and you're still waiting on hold just as long.
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Dmitry Smirnov
•11 They don't call the IRS for you - you still talk directly with the IRS yourself. What they do is navigate the IRS phone system and wait on hold for you, then call you once they have an agent on the line. They're not claiming to have "priority access" - they're essentially providing a hold service that monitors the connection and alerts you when an agent is available. This saved me from being stuck listening to hold music for hours or getting disconnected after a long wait. When the service notifies you that an agent is ready, you take the call and speak directly with the IRS representative yourself.
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Dmitry Smirnov
14 I need to eat my words about Claimyr from my skeptical comment above. After multiple failed attempts reaching the IRS myself about vehicle deduction questions (seriously, I spent over 7 hours across 3 days trying), I reluctantly tried the service. To my genuine surprise, I got a call back within 25 minutes saying they had an IRS agent on the line. The agent walked me through exactly how Section 179 works with vehicle purchases and confirmed the specific weight requirements and documentation needed. They also explained the "more than 50% business use" rule and how it would be verified in case of an audit. What really helped was getting clear guidance about the recapture rules if I sell the vehicle before the end of its recovery period. That was a question none of the online resources had answered clearly. Honestly didn't expect it to work, but it saved me days of frustration.
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Dmitry Smirnov
22 Don't make the same mistake I did with Section 179! I bought a $65k Escalade for my real estate business in 2022, took the max deduction, then only used it for business about 30% of the time. Got audited, and had to pay back most of the deduction plus penalties. The key thing nobody told me: you MUST use the vehicle more than 50% for business to qualify for Section 179 at all. And you need to keep a detailed mileage log to prove it. If you can't demonstrate that business use, the IRS will disallow the entire deduction. Also, be aware of the luxury auto depreciation limits for vehicles under 6,000 lbs - they're much lower. That's why so many accountants push business owners toward the larger SUVs.
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Dmitry Smirnov
•10 How did the IRS know you were only using it 30% for business? Did they just look at your mileage log, or did they have other ways of figuring it out?
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Dmitry Smirnov
•22 The IRS asked for my mileage log during the audit, and I had only kept sporadic records. They compared the total miles on the vehicle to the business miles I could document, and it came out to around 30%. They also looked at my appointment calendar and client locations to verify whether my claimed business trips were legitimate. The auditor explained that without a contemporaneous mileage log (meaning one kept at the time of travel, not created later), they default to assuming more personal use. The burden of proof is entirely on you as the taxpayer to demonstrate business usage. Without proper documentation, you'll lose the deduction every time.
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Dmitry Smirnov
9 Can someone explain how bonus depreciation works with vehicles compared to Section 179? I've heard bonus depreciation might actually be better in some cases, especially with the changes coming next year. Is it worth waiting until 2025?
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Dmitry Smirnov
•2 Bonus depreciation is different from Section 179 in a few key ways. For 2024, bonus depreciation is at 60% (down from 80% in 2023), and will drop to 40% in 2025. Unlike Section 179, bonus depreciation CAN create a loss for your business, which might be beneficial depending on your situation. For vehicles above 6,000 lbs, you could potentially get a larger first-year deduction using a combination of Section 179 (up to $27,000) and bonus depreciation on the remaining basis. For vehicles under 6,000 lbs, the luxury auto limits still apply even with bonus depreciation.
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