How I Write-Off My Dream Car (PAY $0 IN TAXES)

welcome back to taxes made simple i'm your host carlton dennis and today we're going to be going over vehicle deductions my favorite i have tons of clients who love to to buy luxurious vehicles i drive a porsche i had to figure out a way to write it off and if you're watching this video it's because you want to learn how to write off vehicles in a simple way i'm not going to bore you with a bunch of tax knowledge because i know you didn't go to school to learn taxes and i know you're not spending your free time on weekends reading irs tax law so let's dive right in to figure out how we can write off our vehicles in an easy way so we can continue building wealth quicker my name is carlton let's dive right in so we're going to go over two different ways in which we can write off the vehicle today as you guys can see on the board i have actual versus mileage and there's a reason why i have their this up there there's only two different ways in which you can write off a vehicle but there's a number of different ways in which you can purchase a car so we're going to talk about mileage first the reason why is most people are used to tracking miles there's tons of apps mile iq quickbooks even has it now where you can track every single mile you drive that is business related the purpose of doing this is because you as a taxpayer that has a vehicle that's business related can get a deduction based on the amount of miles that you're driving that are business related and the amount of deduction that you get to receive is 57.5 per mile so it's a lot of tracking guys and i want you to track this and the reason why is because there's two different ways in which you can write off a vehicle you can choose to take the mileage or you can choose to take actual cost actual cost is probably what you're already thinking the cost associated with maintaining your vehicle that could be the payments if you've leased the car insurance gas tires repairs etc now the reason why i want you to track this is because depending on what type of business owner you are you may be driving a little bit or you may be driving a lot where it might make sense for you to take the mileage for most of our uber and lyft drivers they're driving a ton so they're tracking all the miles that they take but sometimes we have other business owners like realtors e-commerce youtube stars who want to purchase or want to purchase a vehicle and use it for business purpose so how do we do that well if the vehicle is a business purpose vehicle we first have to determine what percentage of that vehicle is used for business hopefully you have that business vehicle for more than 50 use i'm advising you guys to make sure that it's more than 50 use but once we are able to determine that percentage then we now know how much of that car payment how much of what we're spending on we actually can deduct as actual costs so let's say we leased a car that we bought for our business and we had a car payment if that car is 50 personal and 50 business we can deduct 50 of our car payments if at least we can deduct 50 of the car insurance the gas that we put into our car on a monthly basis the tires that we repair maybe once or twice a year and some of the repairs such as oil changes etc it is so important for us to track all of our expenses because depending on who you are as a business owner you may be driving a lot like i said or you may be having a lot of unexpected expenses that you're not tracking so i want to make sure that you guys are tracking all your expenses now some of my clients purchase cars rather than lease i always advise my clients who are purchasing cars to purchase a vehicle that's over 6 000 pounds especially if they're looking for a big write-off the reason why that i'm advising them to purchase a vehicle that weighs over 6 000 pounds is because underneath code section 179 you can expense a business vehicle 100 percent in the first year accelerate depreciate the entire vehicle 100 in the first year so what i'm getting at is if you purchased a vehicle that weighs over 6 000 pounds that's business purpose we can write off the entire purchase amount i had a client last december right before christmas she wanted to give herself a christmas gift i wanted her to get another tax deduction so she called me she was at the mercedes dealership she said carlton i'm about to buy an amg s550 for any of you guys who don't know that's a g wagon okay that's a big car it weighs over six thousand pounds i said perfect send me the details as soon as she sent me the details i looked at and i was like oh perfect this car is over six thousand pounds you need a write-off i needed an additional write-off for you with your tax planning so i told her to buy it guess what i'm filing her tax returns right now we have a hundred and fifty-five thousand dollar write-off going on her returns because that vehicle was over six thousand pounds and she bought it last year in 2019 and we're filing her 19 tax returns this year in 2020. see she she contacted me we came up with the strategy she purchased something that she really wanted it happened to be business use we wrote off the entire thing and this is where the power of leveraging the tax laws really comes in because we course we know that there's ways in which we can run off vehicles but how should we write off our vehicles and what if we want to get a new vehicle should we buy it or should we lease it understanding the difference between actual and mileage is so so important but also understanding the difference between lease payments and depreciation is important the reason why i say this guys is because if you decide to buy a vehicle and you didn't lease it and that car is in your name you can depreciate that vehicle based on the portion that is business related over the course of five years so let's just say i had to be a vehicle that's a hundred percent business related and let's say when i bought the vehicle was fifty thousand dollars well if i purchase the vehicle and i choose to do actual expense instead of mileage i can write off the actual expenses which include insurance gas tires repairs etc including depreciation so if i had a fifty thousand dollar car i had it for a hundred percent business use 50 000 divided by five is a ten thousand dollar write-off every single year without accelerating any depreciation typically you're going to accelerate some of that depreciation when you're filing your tax returns your tax account will teach you about that i'm not going to get into the thick of it but that is how it works five years is the magic number to remember now if you are leasing a vehicle can you write off your car payments absolutely you can only up to the portion that is dedicated for business i want to make sure you understand this we need that percentage how much is this car used for business how much is this car used for personal now that i have this percentage 50 60 whatever it is that's how much i get to write off on the car payment the car insurance the gas the tires the repairs etc see this isn't that hard it's not that hard to know that it's hard for people to track their expenses it's hard for people to sit down and have a conversation with a tax strategist in the year that they're making financial decisions rather than waiting to get with their tax guy and saying okay so how should we deduct my vehicle this is how we build wealth the right way and this is why i created taxes made simple so we can continue to build wealth fast by leveraging information and once we have information we can make decisions quicker my name is carlton dennis thank you for joining me on my taxes made simple segment and i look forward to seeing you on the next one if you love this video feel free to like comment subscribe if you have any questions you can reach out to me in the dms or schedule a free consultation by visiting the link in my bio talk to you soon

Channel: Karlton Dennis

Views: 100,860

Keywords: taxes, tax write off, taxes made simple, tms, taxesmadesimple, how to write off your dream car, karlton dennis, karltondennis, how to get tax write off on your car, how to tax write off new car, how to get tax write off, tax write offs for business owners, taxtips, tax planning, tax strategy, taxes vehicle deductions, tax deduction, tax reductions made simple, tax advice made simple, write off your car, tax write off secrets, tax write off lesson, tax write off tips and tricks

Id: quWAaQwuAgg

Length: 7min 41sec (461 seconds)

Published: Fri Jul 03 2020