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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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I started a part-time business this year. Can I claim the truck

Resolved Question:

I started a part-time business this year. Can I claim the truck and equipment on my taxes as a business expense?
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.

Hello and thank you for using Just Answer.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer's trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit. You will be given 5 years and 3 out of those years must show a profit to be classified as a business and not a hobby.

You can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction.

Your equipment will be depreciated based on the life of the item.

Customer: replied 2 years ago.
The value of the truck will exceed the gross sales from the business. Do I set up a depreciation schedule or take Section 179?
Expert:  Robin D. replied 2 years ago.
If you 179 the truck then you will not have anything for the next year to claim for it. If you use depreciation then you can extend your expenses over more years and ensure that you have an expense for the following years that is certain. It is your choice but you need to make sure that you meet the requirements to be classified as a business.
Customer: replied 2 years ago.
My last question is this. Do I need a CPA or can I do the accounting myself?
Expert:  Robin D. replied 2 years ago.
You can do it yourself, you just need to begin by keeping all your receipts and documents in order. If you know that you are not someone that general keeps things under control then you may want to get a professional to assist you with the bookkeeping. It really depends on how big this business is and what you are doing. Many small businesses can be handled at least in the first years by the owner.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7363
Experience: 15years with H & R Block. Divisional leader, Instructor
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