I just sold my old personal pickup that I used for doing construction side jobs because it was getting to the point where it wasn’t reliable for my personal life.
I plan on buying a newer truck anyway because it is needed in my personal life.
Assuming my projected income is $15,000/year from the side business, am I shooting myself in the foot tax wise by not waiting for the start of new year?
I would like to be able to write off a portion the sales tax and down payment if possible.
It will have a gvwr over 6,000 if that matters.
Thanks!
If you can afford taking a huge payment on for a new truck and the insurance go for it. But it will be years before you can break even on the cost of new trucks and if you have to pay a premium? You will lose about 20K as soon as you pull it off the lot. Prices are still insane and the lots are filing up pretty fast around here.
The question isnt if i should buy a truck, I am buying a newer truck regardless, as I stated, I need it for my personal life anyway. My question is: if a plan on also using it in 2024 for some taxable side work, should I wait for 2024 to buy it?
I have a tax lady that handles this, so I don’t fully know, but my understanding is vehicle are depreciated over a certain period of years (5 maybe?). So, you’d get some tax benefit this year if you bought today, then some next year, then the following, etc.
He’s talking about S 179 or S 168.
“NOTE: I have no intention of filing business expenses for 2023 as it was more of a hobby than real side work”
Accountant here. You have received some very bad advice in this thread. Conversely, GoddessLeeLu gives an almost-totally correct answer.
An activity not entered into for profit must be reported using what are commonly called the hobby income rules. Gross profit (gross revenue less cost of goods sold) from the hobby is reported as other income on ones 1040. No other deductions are allowed. Consequently, you cannot deduct any costs relating to a vehicle, tools, office expenses, permits, or other expenses for 2023.
Since the activity was not entered into for profit, you are not liable for self-employment tax.
With only $15k income from this business, the truck is irrelevant. After standard business deduction you have nearly 0 tax liability to begin with
“After standard business deduction…”
There is no such thing as a standard business deduction. The standard deduction can be applied to ones AGI. but the OP emphasizes his hobby is only side work. He would not get a standard deduction for his hobby income and another for his other income.