fast1

I've wondered about stuff like this for years. All our friends use accountants at tax time and although not self-employed, they claim to have tons of write-offs. We tried taking our information to someone last year, but after looking at our paperwork he refused our money saying there wasn't anything he could do for us that TurboTax wasn't already doing - we were too "vanilla".

You can deduct a car's depreciation from your taxes provided that it is used primarily for business. A person who works in sales and uses his personal car for client travels, can deduct the depreciation of his car based on the percentage of the time that it is used for business. Turbo tax should have the details for depreciation.

kilrgt

Dell I am not claiming to know anything about you or your wifes business, however being in Canada our Tax brackets are as high as 50%..no **** I said 50% (I am sure fellow canucks will verify). In order to keep some of that hard earned cash , I have been pretty creative in doing such, A holdings company does wounders for me, as I have investments, It does allow me to things that allot of others cannot.As i said My holdings company does have some investments so it does allow me to get away with some things.I can market myself( NEW WHEELS AND CHARGER) also I can entertain clients( TRACK WEEKEND FOR ME AND MY FRIENDS), Capital loss ( WEEKEND IN VEGAS), and even capital gains(WEEKEND IN VEGAS). My point is this talk to someone that you can trust and I am sure you can find many things that you can "write off". I know everyone should pay taxes and I do..More then the average person , but this shouldn't mean that we allow our elected officials to bend us over and enjoy .

TD in DC

There is a big difference between claiming something and not getting caught, and succeeding in your "theory" if you happen to get tapped for an audit. Consult with an accountant. You may wish to take the risk, but you at least need to understand what the risk is before you take it. Many of the explanations people give for how they are writing off their expenses sound suspiciously like that theory that African-Americans do not owe income tax due to slavery, which didn't go over too well with the IRS.

pl

LVDell, you need to talk to an accountant, not one of those H&R block guys. you need to plan ahead for years to come.
good luck!

joes c4 cab

KilrGT - I will save you a spot in the big house next to me when they convict you of tax evasion and me of killing my PCNA rep. At least we will have something to talk about.

bobporsche996

when i was a bit younger, a few years back, my friend's father had a thriving dental practice.. and he loved cars, and had a wide variety of them to say the least.. he engaged in a little bit of unsavory tax related activities.. he was sentenced to 7 years in federal prison...

when it comes to taxes and certain writeoffs, anything you aren't sure about, talk to an accountant.. don't think just because you write it off, and nothing happens in a year.. that you "got" away with it..

they track activities for several years... and all can come back to bite you..

when you write off such an expensive car, it signals a red flag, and you will have to document, every mile, every trip, etc.. that you take that you can match up to a business related activity.. if you don't and are audited... you may regret it.. all the time involved in writing up every mile on the car may not be worth it for many for such a small percentage of the write off of the mileage used.. depends on how much you use for business though.. if 80% of your payment is business related, it may make sense.. 20%, probably not..

LVDell

Good point Bob. Wow! 2 great inputs in the same day that I agree with you. Did you turn the corner?

The more and more I think about it, it just doesn't make sense to "try" and write-off the car. Our income more than gives us a lifestyle that really can't be made any better by being able to write off a few more deductions and net some pocket change.

Now, if I lived in Canada, I will def pursue it. Damn those taxes!!!

jury_ca

I'm not going to offer any professional advice as I'm not a tax specialist. However, I am fairly familiar with Canadian business tax laws and they are quite similar to US tax laws, so I hope to clear some misconceptions in this thread.

1) You need to earn business income in order to write off any automotive related expense against that. You can't claim your personal expenses against your salary if you work for someone else. You cannot claim automotive expenses, unless they are related to the type of business you're involved with (eg. salesperson driving around). You have to separate the personal and business nature of car expenses by keeping a mileage log and can only claim the business portion.
2) There are caps to the amount you can write-off in depreciation or your lease payment. (i.e. you can't buy a Bentley and hope to write off a huge depreciation expense each year). A Porsche 911 is also above these caps.
3) If your business owns the vehicle, you can only depreciate over the specific period that has been specified under the depreciation schedule for that asset class, not "over a billion years." (This usually works out to between 3-5 yrs)
4) You cannot sell something to yourself at a profit (non-arms length transaction) and claim a taxable loss/gain. Non-arms length transactions are adjusted out to Fair Market Value.
5) You cannot write-off personal expenses as business expenses
6) Trips to Vegas are neither capital gains or losses (all wins are tax-free anyway)
7) A holdings company with investment income is free to pay out income to its owners or provide "benefits" which can be deducted from its income. However, any such payouts and benefits then become taxable under the personal income portion of your tax return. Think of it this way: Your company pays you a salary and it can deduct the salary expense from the company's taxable income, but you end up paying taxes on your salary anyway.

Believe me, it is very difficult to find "legal" loopholes here.

kilrgt

Ok I was having a little fun, but maybe you should talk to someone about looking at your taxes. geez.

nycebo

Wrong! Vegas winnings can be taxed. Check out this article from Bankrate

As to deducting a car, you are taking a mighty chance of encouraging an audit with a sports car or Bentley. Now, you may succeed in making your case during the audit, and you may also succeed in drawing attention to other 'situations' in your tax return with that audit. So, with sports cars, it's best to be safe than sorry with your deduction. However, with you Cayenne, there's a good shot that you won't have a problem since it's an SUV. As everyone has mentioned here, get yourself a good accountant to use for LIFE and have him run you through the different scenarios.

Generally, people do deduct a 'portion' of their car payment when going that route tax return-wise. I think that anything greater than 50% will flag the IRS though unless you keep very detailed receipts of its use.

LVDell

Those winnings are ONLY tax free as long as you do not have a single payout of $5K at any one time since the casino's are obligated to report that to the IRS....and they do.

As well, if your spending is tracked (money wagered and money won) by a casino host or any other way, you can be assured there is a good chance that is reported....especially if you clean house one weekend.

kilrgt

Some **** retentive people in here...dam I cant even have a little fun anymore WTF is that!

RUSSCPA

If you need assistance email me. I have my own accounting practice and have been handling these matters for many years.

Gary (CPA)
2004 CAB

jury_ca

Haha. How do you know we aren't having a little fun with you?

Lottery wins are tax-free for Canadians.

thewump

My understanding (US) is that you can either claim mileage ( 39c / mile I think ) or deduct the percentage that the car is used for ( your ) business. For both you are required by the IRS to keep strict logs of business usage such as date, start-end mileage, reason for trip. If you drive a piece of crap then the mileage route is the one to take. On anything that is worth money, the % deduction is better. You can include a percentage of ALL costs of the car ( taxes, insurance, gas, servicing etc ), and your CPA would roll in depreciation.

My strategy is to make one road trip / year that relates to business, usually Denver to San Diego round trip - which is very enjoyable so I love it, and it makes the business usage percentage around 25-30%. There are very clear guidelines on what makes a trip qualify as a business trip, and of course very careful about that.

Something I've read about but not yet tried ( because she is too young ) is a method of buying stuff, then giving it to your children who then lease it to your company. The child must be at least 7, and the advantage is that children don't pay taxes on a pretty big chunk of money - I THINK that it's the first $21,000 of earnings or something like that.. don't bash me on the numbers though - I'm not 100% sure of them. The amount paid to the child is 100% deductible, but there's a good amount of that will not be taxed. Play games like this though and I think that the chances of an audit go up exponentially.. you'd have to be squeeky clean and be willing to go through an audit and the costs associated with that.

Oh yeah.. and don't **** off your kids.. they own your car ;-)

Keith