Tax Deductible on Car Purchase. Family Business but also work for another company?

Question

My parents current work for a big company, but they also own a small business selling clothing and fashion acccessories. They are looking to buy a used car thru a private party. Is there a way to write it off as a deductible for our own business even though they are working at another company also? Basically, we are trying to save as much money as possible. Anyone have any recommendations such as mileage and depreciation writeoffs or just anything at all.

It will basically be used for when my parents need the car for their business. I will also be using it for my personal use. They current have a sole proprietorship business. We are still a new business, only a year old, and don't have much experience with taxes and such. The business to personal use would most likely be 50/50.

Answer 1

You can write off the business proportion of car expenses. So if you do not use it for business purposes there is no deduction.

Is the car going to be used more than 50% for your parents' small business? If so, you need to speak with your accountant as there could be significant tax savings. You will need to keep detailed mileage logs - how much, where, with whom, for what - as well as a note of expenses incurred.

Deducting expenses simply because a business has been placed in between buyer and seller could be considered fraud and would be a felony.

Edit: Is this car going to be an SUV or a truck over 6,000 pounds? If so (and business use truly will be above 50%), you really need to see a CPA as there are tax benefits to be had. Sometimes the immediate tax benefit is not the best. Only a professional accountant can advise you, based on your circumstances. If it is a regular car, my previous advice stands - keep records of all expenses incurred with the car and a note of business and total mileage. this last one is most easily done by noting the total mileage at the start of each year and keeping a small notebook and pen in the vehicle to record business mileage etc.

There really is no substitute for good professional advie when you start any sort of business. If you tell a CPA what your business is all about they can suggest ways of keeping records which will make it easy for you to maintain. The idea is that, at the end of the year, you present the CPA with a picture of what the business has done over the year. The CPA can then use the information to correctly complete your tax return. That means you pay less to the CPA but he or she will not mind because it is a "tidy" job which gives the CPA a higher profit margin overall. It's a win-win situation.

Answer 2

when you qualify for the foreign income exclusion by the time limit and the dollar amount, you will have your personal exemptions of $3650 for each person on your return, you will be able to itemize your deductions, ie. the mortgage interest, the property taxes on your home, none of your repairs will be deductible, nor the car loan, the only part of student loans that are deductible is the interest which you will receive a 1098 I, and school related deductions will be reported on 1098 T as an independent contractor you will show on your Sch C the expenses that are work related, ie. what expenses it takes to make the income you are reporting, you might got to www.irs.gov and request publication 334 to help you determine expenses you can show unfortunately her early withhdrawal of the 401(k) is going to cost you, not only a 10% penalty but also adds to your gross income your work related expenses prior to leaving here you say were reimbursed, if any were not, if you have receipts you can claim those the personal phone you obtained to keep in contact with family is a personal thing and not related to your business--not deductible some of your repairs might qualify for the energy credits, depending on what you replaced the old ones with(windows etc)

Answer 3

Even though that's unethical if you're not using that vehicle for that business only, you can write it off and the fuel expenses if you have a licensed business. I don't know any differences from LLC to INC or anything else but you should be able to write the vehicle expense off. Now if you have a resell certificate you can get the vehicle free of tax if you claim you're going to sell it under the business at some point.