New Car for my Home Business (Schedule C)

[nemgan]

What is the name of your state (only U.S. law)? Colorado

Hello and thanks in advance for any advice.

I have a small one-person (me) IT business as a full time job which I started 2 years ago. For tax purposes, I use shelf software and calculating my business net income is easy since my expanses are simple. Around 50% to 75% of my vehicle's use is strictly for business and I do keep records of everything. I am looking to purchase a new car in the next few months. I'm planning on paying around $25K for a used vehicle with $10K down payment and the rest financed. Can anyone please provide some insight on how purchasing a new car would work as a business expense given my situation?

Thanks Again!

Nemgan

 

[LdiJ]

What is the name of your state (only U.S. law)? Colorado

Hello and thanks in advance for any advice.

I have a small one-person (me) IT business as a full time job which I started 2 years ago. For tax purposes, I use shelf software and calculating my business net income is easy since my expanses are simple. Around 50% to 75% of my vehicle's use is strictly for business and I do keep records of everything. I am looking to purchase a new car in the next few months. I'm planning on paying around $25K for a used vehicle with $10K down payment and the rest financed. Can anyone please provide some insight on how purchasing a new car would work as a business expense given my situation?

Thanks Again!

Nemgan

It wouldn't, at least not in the way that you are thinking.

When a person uses a vehicle for business purposes they can either claim mileage (57 1/2 cents per mile for 2015) or they can take actual expenses. Taking actual expenses still requires you to track business miles in order to pro-rate expenses between business and personal use. Mileage, in nearly every case, turns out to be better than actual expenses.

Buying the car itself is not a deductible expense. Depreciation would be if you chose to claim actual expenses instead of mileage, but the rules for depreciating a mixed use vehicle are very complex and not particularly favorable.

 

[davew128]

In other words, the same as your old car.

 

[nemgan]

In other words, the same as your old car.

Great. Thanks for the response.