Finance Questions? Ask a Financial Expert for Answers ASAP
Hello, Kirk and thanks for your question
You can only write off a portion of your truck purchase that is used for business purposes
You cannot write off the entire purchase amount.
You can choose either the actual expenses method, or the standard mileage method to write off deductions on that vehicle as well.
I am only planning on using the delta between my trade-in value and the final purchase price of the truck (will be used).
Also, you can't write off the entire purchase in the year of the purchase - you will have to depreciate the purchase
It would be this delta cost amount that I would proportion relative to the ratio of miles driven for business vs. total miles driven, correct? Or proportioned based on time used for business vs. total time used? Which method is correct? or is either method correct? I am planning to use the standard mileage method; will this then negate my ability to write off a portion of the delta cost, or not?
You would take the total cost of the truck, and take that cost over 5 years - and then take that expense and multiply it by the ratio between the business use miles and total miles
You can use standard mileage or actual expense - but not both
So, if you use standard mileage you could not depreciate the truck purchase
Okay; understood. Finally, in your experience, and in general, does one method seem to outweigh the other with respect to minimizing taxes, given all things being equal? Or is one method better for reducing taxes more in the short-term and the other in the long-term? If so, which is which, generally?
Generally, over the long haul the standard mileage will give you better tax breaks. In the short time, it's actual expenses
I typically stay with the standard mileage approach
Thanks; I appreciate you giving your opinion. I think that is it from my side. Any further words of wisdom or tidbits of knowledge?
No, not that I can think of...just, when you have received all the information you need, please rate my response as "excellent" so that I may receive credit for assisting you today
I can honestly do that. Many thanks.