income tax help?

Question

i am a 1099 misc form holder considered a self employed individual and i want to deduct a business use vehicle however here is my ? the vehicle i have been using i am making monthly payments on to my brother (since i am making payments till paid off the title and registration are in his name still) which it will be paid off next month well due to this do i claim it as a leased vehicle or vehicle i own or what do i do . i really need to claim it because i had 22000.00 in non taxed compensation please help with all details you can tell me thanks

Answer 1

You can't write it off if it is not your own. It doesn't matter if it becomes your car this year or not. It wasn't in 2006. You can write off the payments to him. You need to get recepts from him signed and dated. Talk to a tax advisor about all of the details. Don't just go by what ANYONE on here says. You could get in a lot of trouble and the last people you want to get in trouble with is the IRS!

Answer 2

You have a leased vehicle situation, which may or may not be also an issue for the leased vehicle inclusion rates if you have a luxury vehicle (yeah a Honda Accord is a luxury vehicle to the IRS)

In order to determine the deductibility and appropriate amount, you're going to have to play "20 questions" with your tax advisor. MOST IMPORTANTLY: You have to have some written proof of business use. This may or may not be a logbook. I have succesfully won audits with just sales receipts showing merchandise was delivered to a specific address.

Do not do this the amateur way to save money on tax prep fees. If you do not know what you are doing, see a pro.

If you cut your own hair at home, you only have to live with the disaster for a few weeks. If you screw up your taxes, you may pay for it for years!

WealthBuilder
Enrolled Agent

Answer 3

Well, business use is tricky. Say you put 15,000 miles on the car and only used 1500 for business (not including commuting to/from work of course) That means, it's 10% business. You can either take standard milage or actual expenses which would include 10% of the depreciation, interest paid (even if it's not in your name, it can be understood that it is your depreciaion as long as your bro isn't taking the deduction as well.)

If you are self-employed you should really see a tax accountant, b/c you probably could be taking a home office deduction, auto (which laws have changed recently regarding s179ing heavy SUV's/trucks). There's also probably some miscellaneous business expenses that you have looked over. IF you don't have anything you'll probably get some tax penalties expecially if you didn't make any estimated payment.s

Answer 4

You need to familiarize yourself with the rules for a "capital lease"

You have not given enough information, but my guess would be that the arrangement with your brother would be most correctly classified as a capital lease. Capital leases are accounted for more like an asset purchase with a loan or interest component. The asset is capitalized and then you are entitled to deductions for the interest component of the payments and the depreciation of the vehicle. It gets complicated.

For simplicity, you might just go ahead and say that you are using your personal vehicle in your business and then base your deduction on the standard mileage rate.

Answer 5

It doesn't matter what happens this year you are paying your 2006 Income tax. So the car was leased and you must treat it as a leased car.

Answer 6

The best advice I can give is hire a tax accountant. They usually save you enough to more than pay their fee.