Tax Expense Question with EV

[malthusunc]

I am self-employed and I have always written off my gas, oil changes, tires, etc. as a business expense (didn't mess with mileage).
What is the best way to expense the costs of an EV? I bought it in April and put 16,000 miles on it last year for work. I'm not sure what to tell my accountant. Can I just give him the mileage? Or convert the mileage to an expense based on what I pay for electricity? The last time I talked to my accountant he said he would look into it, but I didn't know if anyone on the board had experience with expensing the costs of an EV. Thanks.

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[ARK]

I would speculate that with an EV, the standard mileage deduction would be a better bet as opposed to figuring out actual costs since EVs tend to be so much cheaper to run than ICE vehicles.

However, I am just speculating. Still, I know the mileage deduction last year was 56 cents a mile. So your 16,000 miles of business use translates to a deduction of $8,960. Can you show actual business use costs that exceed that?

Perhaps talk to your accountant about what expenses qualify and how they may need to be amortized, if at all.

 

[RickMachE]

If you charge at home, you either need a separate meter or an intelligent charger that tracks charging along with a known electric cost or you have no way to deduct actual costs.

 

[KevinS]

Consult an accountant.

Attempting to figure out your taxes by using this forum is like trying to design/build a house by watching HGTV.

 

[malthusunc]

Thanks for the replies. Obviously, the accountant will have the final say. I don't mind not being the smartest guy in the room, but I don't like being the dumbest, either. Just wanted to see what the board experience with this was. Sounds like taking the mileage deduction will be best. Sounds like I should have been doing that with my ICE vehicle also (that figure is a lot higher than my gas, etc.). Thanks.

 

[RickMachE]

Thanks for the replies. Obviously, the accountant will have the final say. I don't mind not being the smartest guy in the room, but I don't like being the dumbest, either. Just wanted to see what the board experience with this was. Sounds like taking the mileage deduction will be best. Sounds like I should have been doing that with my ICE vehicle also (that figure is a lot higher than my gas, etc.). Thanks.

If your accountant didn't catch that your actual expenses for your ICE vehicle were lower than the standard deduction, you probably need a new accountant.

 

[malthusunc]

If your accountant didn't catch that your actual expenses for your ICE vehicle were lower than the standard deduction, you probably need a new accountant.

My wife would agree with you. He is not very proactive. Nice guy though

 

[malthusunc]

If your accountant didn't catch that your actual expenses for your ICE vehicle were lower than the standard deduction, you probably need a new accountant.

Just a follow-up. My accountant says I can't do mileage standard deduction because we are doing actual expenses - which includes writing off 75% of the vehicle's initial cost when we buy it (the whole reason we typically buy a new car every few years is the get the big deduction in years we have made more money). So that is why - once I go the route of writing off the initial expense - I am "stuck" with actual expenses from that point forward and can't take the standard mileage deduction.

This year we had the Mach-E and right before the end of the year, I bought my wife a Jeep Wrangler 4xe (hybrid) which also gets the $7,500 tax credit. We got two $7,500 tax credits and wrote off $116,000 worth of vehicle costs this year and still owed $15,000 in taxes (of course we were penalized for how much we were able to sell our used cars for - almost exactly what we paid for them a few years ago).

I say this not directed specifically at you, just for general knowledge (the kind of thing I didn't know until I talked to my accountant). ?

 

[RickMachE]

I don't know how anyone writes off this kind of dollar amount in a year.

 

[GibUtes]

I don't know how anyone writes off this kind of dollar amount in a year.

They hire good accountants. They leave it to suckers like us to pay our fair share in taxes.

 

[RickMachE]

Smells bad

 

[malthusunc]

They hire good accountants. They leave it to suckers like us to pay our fair share in taxes.

So in this thread, my accountant went from being incompetent to good. ?
And the $15K I have to pay in taxes is in addition to the tax payments I make every month. Being self-employed is no joke and I work like a dog to have the privilege of paying all of these taxes. If you don't think I pay my fair share in taxes, then I don't know what to tell you. ?

 

[malthusunc]

I don't know how anyone writes off this kind of dollar amount in a year.

Went back and looked and it was actually $91,000 we wrote off (so many numbers running around). But we had to buy $130,000 worth of vehicles this year to get to write that off.

Again, it is my understanding it is just taking the bulk of the depreciation upfront (so in the following years we will be writing off almost nothing). And, if we sell the cars, we have to give that back - that is another reason that we had such a high tax liability this year - the cars that we bought two or three years ago and took the big depreciation number upfront - when we sold them for the same amount as we paid due to the strong used car market - we had had to pay back all of that depreciation we took off a few years ago (because the cars didn't depreciate, essentially).

Nothing directed at you - you are free to feel however you want about the tax code - just explaining how all this works if anyone else is interested. ?

 

[RickMachE]

You're buying these as business vehicles then. Multiple vehicles, all driven by employees of the business?

 

[malthusunc]

You're buying these as business vehicles then. Multiple vehicles, all driven by employees of the business?

Yes. I'm self-employed. I bought the Mach-E. My wife is self-employed and we bought her the Jeep 4xe. Every few years we end up buying new vehicles when we've made too much (her business fluctuates - some years she loses money and some years she makes money) to help with the taxes.

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