Taxes - Writting things off.

[Canyonbc]

VERY important point...you beat me to it, but I wanted to second that:

You EITHER write off actual vehicle expenses (fuel and depreciation included) OR standard mileage rate (48.5 cents), but NOT both. If you choose milage that is all you write off.

You cannot use the standard mileage rate if:
*You have used actual expense on the same vehicle in the past (I think since 1997...)
*You have 5 or more vehicles operating for the business at any one time
*Other stuff that wouldn't generally apply to us tree guys...

If you have a vehicle you don't put many miles on, you are likely further ahead writing off actual expense - more paperwork, but the depreciation on a low mileage vehicle is likely to outpace the 48.5 cents per mile. More expensive trucks or trucks with very low gas mileage are probably better off with actual expense too. Besides if you are depreciating it, you have to get a new (or another used one) one every 5 years to keep the write off coming :biggrinbounce2:

In all honesty, this isn't the best place to be getting tax advise...we in't joining you in court if things don't work out right

I don't have a CPA, but I spend a lot of time reading IRS pubs. It is a royal pain the first couple of years, but gets better once you have been through it a couple of times. I used to do it all by hand. Spent about $60 on HR Block brand "Tax Cut" software last year - well worth it.

There are a couple of pages here that will tell you more than you want about milage:
http://www.irs.gov/pub/irs-pdf/p463.pdf

Here is everything (and much much more) that you would ever want to know about depreciation straight from the Man:
http://www.irs.gov/instructions/i4562/ix01.html
and the form to do so:
http://www.irs.gov/pub/irs-pdf/f4562.pdf

Many of the normal business write-offs/deductions are covered on
Schedule C
Schedule C instructions (see especially Part 2 starting on page 4).

Have fun

Thanks,

Ya i put some phone calls into today...with friends that run other tree service business's and i want to get talk to them about there CPA.

Thanks for the sites too.

Canyon

 

[hermit63]

yep

schedule c

 

[Canyonbc]

schedule c

Ya i went on there last night and started reading it...alot of good information in there...

Off to work, but more to read tonight.

 

[urbanlt]

Tax write offs

Normally you depreciate business equipment over 5-15 years. But if you choose under Sec 179 You can write off up to $104,000 worth of equipment and trucks in one year, even if you buy them using financing. This is a good way to avoid taxes in those beginning years when money is tight. You can not however make your income go below $0. There are also weight limits on trucks. They have to weigh more then 6,000 pounds to take Sec 179.

If it is December and you know you are going to make about $60K this year and are also going to need a new truck with in the next 6 months you might want to buy it now. However if you are only going to make $15K you should probably wait.

Overall if you use it for business you can write it off but there are some gray areas so keep track of every expense and talk to your CPA at tax time.

I also suggest instead of asking your tree buddies what CPA they use you ask a business owner perhaps a customer or a vendor who you admire and think has their stuff together who they use.