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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22339
Experience:  Taxes, Immigration, Labor Relations
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If I am a single male with no children and make approximately

Resolved Question:

If I am a single male with no children and make approximately $35,000.00 per year as a self contractor with $10,000 worth of eligible tax write-offs, what would be my estimated amount owed in taxes at the end of the year.
Submitted: 5 months ago.
Category: Tax
Expert:  Lev replied 5 months ago.

Lev :

Hi and welcome to our site!
So far - if you have net business income $35k minus $10k = $25k.
Assuming standard deduction, no other deductions or credits...

Lev :

Your estimated tax liability would be...
self-employment taxes $3530
regular income tax - $1540
Total federal income tax liability - $5170.

Customer:

If I purchased a work related vehicle, could I use the total of the purchase towards a write-off?

Lev :

You may not deduct the cost of the vehicle immediately. That cost must be depreciated over several years and only if you choose to deduct actual expenses - and not based on the standard mileage rate.
If the car is used for business travel - that might be better to use standard mileage rate to deduct travel expenses related to your business.

Customer:

So say if the vehicle cost $20,000,

Customer:

what amount of this could I deduct?

Lev :

The maximum amount you may deduct as depreciation in the first year is $11600. That is based on 100% business use.

Lev :

Sorry for typo - the maximum depreciation in the first year including section 179 and bonus depreciation is $11,160 for 2013.

Customer:

If the vehicle was not bought outright, but instead was being financed how this affect the deduction?

Lev :

There is no difference if the car is paid with your own money or with the loan.
Th eissue is if the car is used for business and for personal purposes. Only business portion is deductible.

Customer:

ok I see

Customer:

Legally speaking u would have one vehicle for leisure purposes (current vehicle), and one for business purposes (future).

Lev :

For instance - if the car is used 75% for business the maximum depreciation allowed in the first year is $11160*75%=$8370.
In additional - you will be able to deduct a busines portion of gas, maintenance, etc.

Lev :

If the car is used 100% for business purposes - all expenses related to that car are deductible.

Customer:

Thanks for explaining it like that, I really have a good understanding of how it works to some extent now.

Customer:

What would the second year total be?

Lev :

The total deduction will be based on your actual expenses. In additional to depreciation - you will add all your actual receipts for gas, oil change, etc - whatever you will pay for your car - will be deductible - assuming 100% business use.

Customer:

I'm asking based on just the depreciation side.

Lev :

the maximum depreciation in the first year including section 179 and bonus depreciation is $11,160 for 2013.

Customer:

What would the second year depreciated amount be?

Lev :

First year - $11,160; second - $5,100; third - $3,050; fourth - $1,875

Customer:

That's exactly what I needed to know thank u for the info.

Lev :

But generally all that information is in IRS publication 463 - it is not updated for 2013 yet.
You may review all information for 2012, but later in Januarry - it will be updated for the current tax year - www.irs.gov/pub/irs-pdf/p463.pdf.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22339
Experience: Taxes, Immigration, Labor Relations
Lev and 6 other Tax Specialists are ready to help you

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