SUV Tax Break?

Question

Does anyone know the implications of the tax break if you have two jobs. One job would qualify as self employed lets say I made 100,000 on the self employed job and 90,000 for the second job. If I use the vehicle to travel to my second job does this reduce my tax credit? Also I wanted to buy the Range Rover Sport, they claim I can get a tax break of 35,600 dollars in the first year. Does this mean my taxable income for my self employment is reduced to 64,400? I plan on buying the suv in early 2008.

Answer 1

Whoever is telling you that you can simply write off the total price of an SUV needs to put down the eggnog. This is untrue. There are provisions for depreciating trucks and SUVs which are used for bona fide business purposes.....not commuting.

Mileage to get to and from work is not deductible.

Your total income from your question is $100,000. Depending on how your business and personal deductions fall will determine your taxable income but I can't imagine a scenario where it will drop all the way down to $64400 unless your business is showing a massive loss.

There is no tax break for holding more than one job.

Answer 2

As a further note on the 50% rule, if business use of the vehicle falls to under 50% during the first 6 years you own it the 179 deduction must be recaptured.

The recapture is at ordinary rates, plus it is subject to self-employment tax.

Answer 3

If you use your vehicle to go to your place of employment (the second job), from your place of self-employment (which is not your home), then your transportation expenses are unreimbursed employee expenses. You would not be able to deduct those expenses from your self-employment income. The deduction would appear on Schedule A and be subject to a 2% of AGI floor. If your income is $190,000, only expenses in excess of $3,800 might be deductible.

If your place of self-employment is your home, and you are driving to your place of employment from home, this is commuting costs which are not deductible at all.

The large deduction you quote would apply if your vehicle was used 100% percent for business purposes, which is not the case from your description. Moreover, if your vehicle is used 50% or less for business, $25,000 of the deduction entirely disappears. You might still be able to take mileage from one place of work to the second place of work at 50.5 cents per mile, or a percentage of actual costs based on the percentage of business use.