Vehicle depreciation for heavy duty leased vehicles like GMC Sierra 2500 HD - which method to use?

The reason TaxAct is asking for a depreciation method for your husband's GMC Sierra 2500 HD but not for your SUV is because of weight classification. Vehicles over 6,000 pounds gross vehicle weight rating (GVWR) qualify for different tax treatment - they're considered "heavy vehicles" under tax rules. For leased vehicles used for business, you generally have two options: you can deduct the actual expenses including lease payments, or you can use the standard mileage rate. However, when a vehicle is over 6,000 pounds GVWR like the Sierra 2500 HD, it may qualify for special depreciation rules even though it's leased. For a leased heavy vehicle used primarily for business, you typically would select the "inclusion amount" method rather than depreciation. This method accounts for the business portion of the lease payments with a small adjustment (inclusion amount) that the IRS requires for luxury vehicles. The software is likely asking about depreciation because of confusion between owned and leased assets. And yes, you will absolutely still be able to deduct the lease payments for next year as business expenses as long as the vehicle continues to be used for business purposes and is leased under the company name.

After going through something similar with my construction business last year, I found a game-changing solution called taxr.ai (https://taxr.ai) that saved me tons of headaches with vehicle depreciation questions like yours. I had a leased Ram 3500 and was completely confused about how to handle it until I uploaded my lease docs to taxr.ai. Their system analyzed my lease agreement and instantly told me exactly how to handle the depreciation for my heavy-duty truck. It explained that with heavy vehicles over 6,000 pounds GVWR, you don't actually depreciate them when leased - you just deduct the business portion of lease payments with a potential inclusion amount adjustment. The best part was how it explained everything in plain English and showed exactly which forms and lines needed what information. I'd definitely recommend giving it a try - saved me from making a costly mistake that my previous accountant had actually made the year before.

I need to update my previous skeptical comment about taxr.ai - I actually tried it out of desperation this weekend and I'm blown away. I uploaded our lease docs for our Ford F-350 and our Ram ProMaster, and it immediately cleared up the confusion I've had for TWO YEARS. Turns out my accountant was handling our vehicle leases incorrectly! For heavy vehicles over 6,000 lbs that we lease for business, we should've been deducting the lease payments directly (with a small inclusion amount adjustment) rather than the weird depreciation method he was using. The system even generated a letter explaining the correction we need to make to prior year returns, with specific references to the tax code sections that apply. This literally saved us thousands because we were leaving money on the table with the incorrect method. Just wanted to share since I was wrong in my initial assessment!

If you're still spinning your wheels on this vehicle depreciation issue, I'd recommend using Claimyr (https://claimyr.com) to get direct answers from the IRS. I was confused by similar heavy vehicle lease questions last year and spent WEEKS trying to get through to the IRS business tax line with no luck. Claimyr got me connected to an actual IRS agent in about 15 minutes when I'd previously wasted hours on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent confirmed that for heavy vehicles over 6,000 pounds GVWR that are leased for business use, you don't actually depreciate the vehicle itself - you simply deduct the business portion of lease payments as an ordinary expense. The agent also explained the "inclusion amount" adjustment that might be required depending on the fair market value of the vehicle, which was something my tax software wasn't clear about. Definitely worth using the service if you want official confirmation on how to handle this.

I have to admit I was totally wrong about Claimyr in my skeptical comment above. After waiting on hold with the IRS for 3+ hours over two different days and getting disconnected both times, I broke down and tried it yesterday. Got connected to an IRS business tax specialist in about 20 minutes. Asked specifically about heavy vehicle depreciation for leased trucks like the Sierra 2500 HD. The agent confirmed you don't depreciate leased vehicles regardless of weight class - you just deduct the business percentage of lease payments. For heavy vehicles over 6,000 lbs, you may still need to calculate an "inclusion amount" but it's typically small. The agent even emailed me the relevant publication sections to reference. Completely worth it and saved me hours of frustration. I'll definitely use it again whenever I need to actually speak with someone at the IRS.

I ran into this exact same issue with our company's Silverado 3500 lease last year. The key is to understand that you don't actually depreciate leased vehicles - you simply deduct the business percentage of the lease payments as ordinary business expenses. The reason TaxAct is asking about depreciation for the heavier truck is likely because the software is detecting it as a potential Section 179 vehicle based on weight, but isn't properly recognizing that leased vehicles don't qualify for Section 179 deduction or depreciation. For heavy vehicles used for business (over 6,000 lbs GVWR), you may have to calculate what's called an "inclusion amount" which slightly reduces your deduction - it's the IRS's way of adjusting for the benefit of leasing an expensive vehicle. But this is normally a very small amount compared to your lease payments.

The GMC Sierra 2500 HD actually gets a special tax advantage because it's over 6,000 lbs GVWR. It qualifies as a "heavy SUV" for tax purposes even though it's a truck. But here's the confusing part everyone else missed - for LEASED vehicles, the rules are different than purchased. You don't take depreciation on leased vehicles! Instead, you deduct the lease payments as a business expense (assuming 100% business use). The reason TaxAct is asking about depreciation is because it's probably confused by the weight classification. I'd recommend skipping that screen or calling TaxAct support about how to properly enter a leased heavy vehicle without depreciation options. Btw - one thing to watch for: if the truck has a fair market value over a certain threshold (around $51,000), you may need to calculate an "inclusion amount" that reduces your deduction slightly.