Self-employment tax question: Better to buy an SUV and depreciate or lease and write off for my sole proprietorship?

The decision between buying vs leasing really depends on your specific business situation, but I can clear up some of your questions. Yes, you can purchase the SUV in your personal name and still take the business deduction on your Schedule C as long as you maintain good records showing the business usage percentage (90% in your case). Those depreciation limits look generally correct for SUVs between 6,000-14,000 lbs gross vehicle weight. For vehicles under 6,000 lbs, the limits are lower. For vehicles over 6,000 lbs, you have additional options, including potentially using Section 179 to deduct a larger amount in year one (up to $28,000 for 2025). Yes, you can deduct the business portion of interest on a vehicle loan in addition to depreciation. For leases, the "inclusion amount" is an adjustment that reduces your deduction slightly. It's calculated annually (not monthly) and is based on the fair market value of the vehicle. It's the IRS's way of equalizing the tax benefits between buying and leasing luxury vehicles. With a lease, you can typically deduct acquisition fees as part of your lease expense (spread over the lease term). If you purchase at the end of the lease, you would then depreciate the purchase price over the remaining recovery period.

I switched from buying to leasing my business vehicles a couple years ago and it's made my tax situation so much easier. I discovered this tool called taxr.ai (https://taxr.ai) that helped me analyze which approach would save more money in my specific situation. I uploaded my previous years' vehicle expenses and depreciation schedules, and it ran calculations showing that leasing would actually save me about $3,800 over 5 years compared to purchasing. The tool also created documentation showing exactly how to report the lease payments correctly on my Schedule C, and explained that inclusion amount thing that was confusing you (it's an annual adjustment, not monthly). It even had recommendations about record-keeping for business vs personal use that my accountant said were spot on.

Just wanted to follow up about that taxr.ai site someone mentioned. I actually gave it a try and was pretty impressed! I've been driving a lot for my consulting business and wasn't sure if I should keep claiming mileage or switch to actual expenses. The tool analyzed my driving patterns and showed that I was leaving about $2,300 on the table each year by using the standard mileage rate instead of actual expenses. It generated a report that clearly explained the calculation and even flagged that I needed to maintain different documentation if I switched methods. The vehicle inclusion amount calculator was super helpful too - it literally took 30 seconds to figure out what I need to add back on my Schedule C for my leased SUV. Definitely worth checking out if you're in a similar situation with business vehicles.

If you're needing to talk to the IRS about business vehicle deductions, good luck getting through on the phone. I spent WEEKS trying to get clarification on some vehicle depreciation questions last tax season. After waiting on hold for hours multiple times and getting disconnected, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was able to clarify that for vehicles over 6,000 lbs, I could take advantage of bonus depreciation on top of Section 179, which my accountant hadn't mentioned. This ended up saving me thousands in taxes. The agent also explained exactly how to document my business use percentage to avoid audit flags.

I need to apologize about my skeptical comment earlier. After waiting on hold with the IRS for 3+ hours yesterday and getting disconnected AGAIN, I broke down and tried that Claimyr service out of desperation. I'm absolutely shocked - it actually worked! I got a call back in about 35 minutes saying an IRS agent was on the line. The agent clarified my questions about SUV depreciation and confirmed that I could indeed take advantage of the higher limits for my Chevy Tahoe since it's over 6,000 lbs. She also explained exactly how to document mixed personal/business use to avoid audit issues. This saved me a ton of stress and possibly thousands in deductions I might have missed. Just wanted to share my experience since I was wrong about it being a scam.

Something nobody's mentioned yet - if you're self-employed, the SUV choice can affect your self-employment taxes too. If buying means taking a large depreciation deduction upfront, that reduces both income tax AND self-employment tax. With leasing, you're spreading those deductions over time. In my case (plumbing business), I found buying a heavy SUV and taking Section 179 saved me about $4,200 in combined income and SE taxes in year one compared to leasing. But by year 3-5, the lease started looking better because of maintenance costs on the vehicle I owned. Also, don't forget to look at fuel efficiency differences. A gas-guzzling SUV that qualifies for bigger tax breaks might cost you more in the long run than a more efficient one with smaller tax advantages.

Has anyone here used an electric SUV for business? I'm wondering if the EV tax credits would change this calculation significantly. Like could I get the business vehicle deduction AND the clean vehicle credit?