HUGE Tax Write Offs You Can Do Now - Auto, Truck & RV

3, 2, 1. Hey, everybody. It is time to get your taxes on. If you're an American dreamer, you own a small business, you want to build wealth, you got to cover your most important cost, which is taxes. And I want to save you. This is your chance to do a little bit of homework on an area you might not enjoy. But I'm going to make it easy and we're going to save a ton of money. Today, I want to talk about the auto deduction. One of the most underutilized tax strategies for so many small businesses is taking advantage of the auto deduction. Now, my name is Mark Kohler. I'm a CPA attorney, bestselling author, a podcaster, YouTube personality. Man, I've been out there for 20 plus years just scrapping away in the trenches on Main street in America, trying to be your advocate and help you save more money, save taxes, guys. Oftentimes it's easier to save money than it is to make money. So let's get to it. I'm here in the studio. We move things around so that I could stand up here for you on this afternoon. I'd love any comments or questions down there in the chat. So ignore any post that shows a little face of mine trying to get you to buy some bitcoin or something stupid. Ignore any of those bots trying to say, oh, I made a bunch of money. Click here. Just focus on this. Let's nail it. Let's talk. And if you have a question or comment, please lay it out. And then my studio, they're going to ask me those questions here in a little bit and hopefully we can make sure you save some money in your small business. Now I want to get to the auto deduction and everybody see this. All right, Is it close enough? We good? All right, we're going to go. So there's two ways to write off an auto mileage or actual. You can take this mileage deduction that's based on the number of miles you drive for your business, or you can actually depreciate the vehicle, truck, suv, RV even, and take expenses for fuel, repairs, maintenance, car washes, whatever. You got to make that car look pretty and look good for your business and you've got to maintain it. That's going to be a write off here under actual now principles number one, wrapping your car with vinyl and saying call me or my, here's my cool business name does not make it 100% write off. It does has. It has no bearing on whether or not you can write off your car. Do not listen to any BS out there on Google that says, hey, if you wrap your car with your signage, you get a better write off. You don't. All you can write off is what it costs to throw the vinyl on your car. Now it's cool, put some vinyl on your car, but get some ads going. But driving it around with a sign on it does not make it more of a write off. So watch out for that. Now let me give you some good news. Number two. We want to write off every car in your life. You might have kids driving a vehicle, you might have a spouse driving a vehicle, you might have a motorcycle, you might have an rv, a truck, a car. All of those can be written off in a small business depending on where you use it. And in fact, before we even get a mileage of natural, many of you already know I love the trifecta. And what we're going to have is down here is your 1040 or your revocable living trust and everything flows down there. We're going to make a smoothie, get the best write offs we can and blend them all together. And on the right hand side you might have rental property and an LLC and you might be driving a truck around and you're going to go buy some tools at Home Depot, go pick up some supplies, go to Lowe's, whatever and you're going to go work on your rental properties. Well every time you drive around in your truck, that's a write off. Then over here you say, well I have an LLC with a side hustle, I don't even drive for Uber or something. Or I have an S corporation and I have a full substantial business with employees and this and that. So you might have a car over here that you're using for personal use and business use and you might have a truck over here that, that you're using for business and we're going to write that off. In a different method we could use mileage on this car, use actual on the truck, then you might even have an rv and you're like oh I got this RV over here and oh my gosh, I wish I could write more of this RV off. Well we might be able to. Do you drive it to conferences? Do you drive it to trade shows to go check on your rental property? If you can find a business purpose for using that rv, I can write it off. Also putting your RV in a waverly rental program is a great way to write off that rv. And finally, third point I want to make, writing off auto includes even the turo strategy. Some of you might buy a truck or car and then rent it out on Turo. I have clients that rent their car on Turo for four or five days a month and it pays for the whole car payment. The rest of the month is cash flow. Incredible business model. So vehicles, no matter how many vehicles you have, we want to find the right method for that vehicle. Final point before we get over here to our mileage versus actual is once you choose a method for a vehicle, you're stuck with that method until you sell that vehicle. So if you start mileage with a car, we're going to finish with mileage that that car is going to the graveyard mileage. If you start acting with a vehicle, we're going to stay with actual. All right, so with those general principles, I want to get on the table our actual mileage rates this year. Now, this is the Mark Kohler calendar. You can get it at my website, markjkler.com this year there's really three. I'm going to write them all down here. I was going to just do the one, but you've got five different types of mileages in three that are right off. Now, the first one is business mileage, 65 and a half cents. Who love that one then, in fact, and I'll put business right here. The next is you might do medical or moving. Now, medical is the best way to go on this because moving is even a harder write off. But that's 22 cents. So that's medical. Moving is only a write off. Now for those that are in active military service. And then finally charitable, and charitable this year is 14 cents. That's charitable. So we have business at 65 and a half, medical at 22, charitable at 14. Now there's two other mileages if you're commuting to and from work. No. Even if you have that car wrapped in vinyl, not a write off. And then you have personal. So when it comes to mileage, we would need to look at your vehicle and go, okay, you drove around for business, 65 and a half cents. But any commuting or drives to the lake or the beach, not a write off. So you may say, well, mark, this year, let's say I put in 15,000 miles. Okay, so will you say, okay, cool, you want to do your best to keep a little log. But if you're reporting to me as your accountant and you say, I did 15,000 miles, okay, how much was personal, how much was commuting? And you come up with some estimates or have a little log that you can rely on. I know there's software out there that preach that has to be total anal up your butt track everything doesn't hurt. But I'm still going to write it off and then you can fight it out later. The irs, as long as it's reasonable is not going to chase us down. So make sure you're honest with how many miles are on your vehicle and, and an honest estimate of how much is personal commuting. And let's say it's 10% each. So 1500 miles here, 1500 miles here and then the rest was business. So that means you had 12,000 miles. So we take these off. So 15,000 minus 3,000. We're at 12,000 business miles. Well man, wait till you see this write off. Let's get in here and check this out. So 12,000 woo. Times 655. That's off of $860. That's substantial. So the more miles you put on the bigger the write off and it can add up quick. You do that to all your cars. Now the actual ends up being a lot of different things. So I want to go to a different paper for the actual actual could be a car, it could be a, or suv and then it could be a delivery like a van or even an rv, something larger. The other way to another issue in here is leasing. Leasing could be a factor that could really play into this as well. So we want to make sure that we're really again using the best method. So for example, say you buy now by the way to write off the truck or suv. Okay good. This is holding up here. If I'm going to do the truck or SUV it has to weigh more than 6,000 pounds gross vehicle weight. It used to be a bigger deal how large the truck bed was and the SUV rule. But I don't care about that. We're going to just make sure that you get this 6,000 pound rule met and then you can get into what's called bonus depreciation. So bonus depreciation is a big deal. Cars have more write offs than ever before in the last 30 years when it comes to actual. Now let me give an example. Let's say you go out and buy this SUV or truck and you don't put a lot of miles on. So this would be example one kind of a moderately expensive truck, suv, not a lot of miles. Holy hell. I want to go with actual. I might be able to depreciate 80% of that vehicle. So I buy a $50,000 vehicle, I might be writing off 40 grand the day I buy it. Even if I buy it with no, no, cash down and buy it on credit, you could write off 80% of that vehicle. That's a big deal. Now let's say you kind of buy a, you buy a big car that's not terribly expensive, but you're gonna put on a bunch of miles. You're a realtor. You're out there on the roads, working on your rental property, you're out making sales calls. In your regular consulting business, you're putting on a lot of miles, but the car didn't cost a lot. We're gonna go with mileage. If you do 20,000 miles, a lot of small business owners put on at least 20,000 miles in a year. Your write off could be 12 grand. And your car payment may only be 300 bucks a month, but you're writing off over $1,000 a month even though your car payment was 300 and your gas was 200. So you get a lot better write off with that mileage when you know that mileage is going to go up big time. Now let's think of the hybrid vehicles. This could be fun. So let's say you're driving a Prius or something, variation thereof, you, and you're getting 40 miles to the gallon. Okay? So 40 miles to the gallon. And let's say a gallon of gas is four bucks right now. A lot of places around the country is four bucks. So if I'm going to drive 40,000, sorry, I get 40 miles to the gallon. 40 times 0.655, that's $26.20. I'm getting a $26 write off every time I put in $4 of gas. Mileage is insane. Now with an SUV or truck, if I'm getting a $40,000 write off for a $50,000 truck and I'm only going to put on 10,000 miles, my write off may only be around six grand. But I just got, if I did mileage, but I get $40,000 write off plus fuel if I go actual. So you got to kind of figure out what works best for you. What I created, and we're going to put it down in chat right now, is an article that I write every year. And this article is one of my most popular articles. And it's got seven rules of thumb. Lot of miles, medium priced car, expensive car. When should I lease? Should I do an electric vehicle? When does an electric vehicle make sense? All of that is in this article. And I think you're going to find it really, really helpful. So click on that down below, make it a favorite, download it, share it with your friends on your social media. Let someone know you're learning how to freaking write off an auto. Because as a business owner, my wealthy clients know this rule. They want to maximize their write offs. Now let's get start. Heading to questions. Are we going to have a few questions here that can help out? All right, I want to start to unpack this. So let's take one of our first questions from our chat. What do we got?

Okay, we've got Nicole Jansen's asking. I'm building a 100k ADU to rent on my primary residence. How much of this can I write off?

Oh my gosh, I love you. Has nothing to do with auto. But I appreciate that. Let's try to. And that's okay. Let's jump over there. Okay. For those that don't know what an ADU is, an ADU is a accessory dwelling unit and they're quite popular in California. And so what we want to do is probably use some cost segregation if possible. So everybody, let's say this is your property and you've got a home up here. First, that this is your primary residence. And. And then in the back you're going to build this extra little home, maybe it has its own entrance. And you're going to put this bad boy in here and build this extra little home called an adu. Now this little ADU could be a great deal to create some extra cash flow. So we're looking for extra cash flow and we build it and we're feeling pretty good. Well, the question is, how much of this can I write off? Well, it depends on your tax situation. The first thing is normally when we buy a rental we subtract the land out, but here you already have the land. So I'm going to say how much does this ADU going to cost? What'd they say? How much they was the ADU going to cost? What was it? Was that 150 grand? Sorry guys, I can't hear you in the studio. How much was it? 100,000. 100,000. So you're going to build this ADU for 100 grand. Okay, if you're a real estate professional, I could do a cost segregation analysis and take off a lot of depreciation in the first year. But you've got to have the income level where it makes sense or be a real estate professional where you're allowed to take all those write offs. Let's do the math. A typical cost segregation on $100,000 ADU, that's with the land out of the mix, you're going to be looking at about a 25% depreciation deduction. So that would be $25,000. Now you can only take 80% of that in the first year right off of the bat. So that'd be 20 grand. So you get a $20,000 write off 20k. Then the remaining five you divide over five years, so that'd be an extra thousand. So you're going to be at about 21,000 in write offs. The rest of it is going to be depreciated over time and we're going to try to make that work. Now, this little 80% 5 divided by 5 thing is also, if you were to Airbnb it, I love the Airbnb strategy. So you might Airbnb it for this year because you don't have to be a real estate professional to take this write off. You just have to make the rules work for the Airbnb. Then come next year, you pop in your midterm or long term rental renter and it works out great. I'm doing this strategy myself and I teach it everywhere we go. The one thing I'm going to recommend is if you're going down this path, you've got to have a consultation with one of my tax lawyers. We'll set up the LLC for you, we'll walk you through the depreciation and all the rules there of what you can and cannot do. Please get to the law firm for just an appointment. On that we do a comprehensive consult where we'll build your trifecta and make a plan for the year and answer all your questions on the ADU and set up your entity, all included, around 1500 bucks. Very affordable. Be careful going out online and trying to knock this out. On LegalZoom, we have a whole service, FixMyLegalZoom entity.com you want a relationship with a real lawyer to design it to you. But I hope that answers your question. You're looking at around 20 grand or a little bit more than 20 grand in write offs if you qualify to get the write off. And it's going to be based on the type of rental and your personal situation. So check that out. Make sure we put down in the chat ww.kkoslawyers.com all right, so what's our next question?

Okay, we have Kyle asking how would you write off a Tesla if it becomes a self driving taxi?

Well, whether It's a Tesla. Or not or whatever. I've seen other cars out there that aren't Tesla. It's kind of funny going around Phoenix, seeing these cars drive around with no one in the front seat kind of freaks you out. But. So if you're buying a car to be a self driving taxi, let me just say first make sure the numbers work. What is your rental income or your revenue from renting it? You're going to have self employment tax, you're renting personal property, there'll be a sales tax component. Unless you're providing a service like Uber. So I'm just going to assume you're going to make a buttload of money with this strategy of yours. If the vehicle is 100% business use, in that situation, I'm going to typically go actual. I'm going to depreciate it. And, and I'm going to, you know, and some of these vehicles have gas and ongoing fuel repairs, maintenance. In that situation, I'm going to go actual. I think with the Tesla, I go mileage because there's no. But you've got your electrical charging. So my clients that are able to get free electrical charging at stations or wherever, then I go mileage because you get 65 and a half cents per mile where if you do, if you are paying for electrical, you get to write off the electrical plus depreciate the car. The bottom line is the Tesla is going to be 100% write off. I just want to make sure that the money you're spending, you're getting the ROI on that, that it, that it makes sense. So Tesla, 100% write off. You could go actual or mileage. If the cheaper your electrical cost is, the more I probably go mileage on it. Get a better write off that way. Okay, Preston, next question.

All right, Frankie is asking if I have a W2 job and commute to work, is there any way I can write off my car? I have a small business on the side and it does 10k a year.

Okay. Whoa, whoa, whoa. I would have. And that's Kyle that asked a question.

That's Frankie.

Frankie. Oh, by the way, do we have any Diet Coke or water? I'll take anything. Just wanting a drink here in the studio. Getting parched. Frankie, you want to lead with. I have a small business that makes 10k a year. Okay, let's talk about how to write off your auto because commuting to your day job is not a write off at all. I'm sorry, Frankie. Any of you out there with a W2 day job. Your route from home to work is never going to be a write off. Your route to go to the grocery store or go to the lake or go skiing or go. Whatever you're going to do is not a write off. But in that small business of yours, Frankie, anytime you use your vehicle for any, anything remotely related to that, oh, I want to use that, that, that auto deduction in a big way. All right, Preston, our next question.

Sarah is asking my two kids race ATVs. Is there anything I can do to write off the cost?

Well, Sarah, if those two boys are earning money racing ATVs, the sooner you can turn it into a business, the better. Now, some of you professional accountants out there, enrolled agents, CPAs or tax lawyers, you're going to say, whoa, whoa, whoa, Mark, that sounds like a hobby loss. Well, the first two years you don't have to show a profit. So Sarah, the first two years your kids are doing this and you have a loss, we can enjoy that. But in the third year you have to show a profit.

If.

And so we don't want to just think we're going to get to write off all this stuff without someday having to show a profit. That's point number one. Number two, like I said, you have to show revenue. So maybe the kids are winning races. Winning races is taxable income. Your kids might be giving lessons on how to drive ATVs to other kids. Your kids might be sponsored and have ad revenue being sponsored by corporations or whatever. Your kids might be selling ATVs and selling ATV accessories. The thing is here, Sarah, this could be a game changer for your life. What I'm about to say, everybody out there, find multiple ways to make money doing what you love. I would love Sarah to have a website for her two boys. They could be selling ATV accessories, ATV lessons, selling ATVs, being sponsored, making money racing. There are so many ways they might be able to make money with these ATVs. And once you can show revenue, now I can go and write off the ATVs, write off the trailer, write off the mileage and the trips to go to the races. And you might even have a booth at every one of these ATV races. And you, Sarah, are selling honey buns and selling soda and selling beers and selling food. I mean, you could have so much fun building a family brand around these two boys racing ATVs. Think big picture. And everybody, it's not about getting a write off for the ATVs. It's also about how can she make money with these boys. Driving ATVs. That's the real strategy there. Next question, Preston.

All right. Valentino wants to know how do they get the R and D tax credit for a service business?

You don't. It's a waste of time in my opinion. It shocks me how many people are pitching the R and D research and development tax credit. Blows my mind. It is not an easy credit to get. But because of software programs or CPAs that aren't willing to go learn real street smart tax strategies, they get all caught up in the R and D thing. And for a service business, it's almost impossible. Now, I've researched it enough over and over again for clients where it just ends up being nowhere. Maybe someone in chat is R and D expert and can help you with a service business. Do not give them a dime. Do not give them a percentage of the credit until you can verify that they're legit. So be careful out there. I'm not a big fan of the R and D tax credit. I don't even teach it, sell it, or use it with my clients. And we have thousands, thousands of Main street clients around the country. So a little opinionated there, but that's my take. Next question, President. Are G wagons still deductible? Humboldt wants to ask. Hell yeah. A G wagon. I love my G wagons. 100% deductible. Whoa, whoa, whoa. Who said 100? Who said any of this was 100% deductible? I never said that. So everybody be careful. Thanks, Preston. We need to G wagon. Suburban, Jeeps, Range rovers, Ford F, 150s, 250, 350s Duramax, Tacomas, whatever. If you have a truck or SUV that you're using in your business, we have to look at the percentage of business use. Then we can go after that portion and go after bonus depreciation, which is limited to 80% of that basis. Then we can do 179. We might get up to 100%. We might in a situation where it's 100% business use. But I'll be honest with you, I can't remember the last time I saw a vehicle. G Wagon. 100% business use. Because if you drive it to the grocery store one Saturday night out of the year, it ain't 100% business use. Come on, people. Don't get greedy. Pigs get fat, hogs get slaughtered. Do not go after 100% write off. Unless it's like a delivery vehicle, it's a fleet vehicle. Or the guy that was talking about putting a Tesla in A taxi program. I mean, the minute you drive your car for Uber, it's a write off. The minute you turn off Uber and go to the movie, it's personal. It's not 100% business used vehicle. So worry about the percentages, talk to your accountant. And hell, I want to write off all I can. I'd love to write off a ton of that G wagon, but be careful. Next question, Preston.

Okay, Kristen is asking. I am planning to buy a new car this year that's over £6,000 and write it off using the section 179. When can I sell it? And what happens when I sell the car is it won't last forever.

Well, I would tell you not to focus on the 179. You want to focus on the bonus. Bonus is the new depreciation. That's better than 179. And then you're going to add 179 on top. Like cherry on the top or banana cream, sun, whatever, Sunday. So start with bonus depreciation, then go to 179. Now you're onto something here. When you go to sell that vehicle, if you've depreciated the hell out of it, you're going to have to recapture part of that gain. There's some heavy duty math. I train tax pros around the country and I want to say this. I'm going to be. And am I doing a webinar later this week on this topic? Is that what we're doing? Is it down in the link? Okay. All right. Now I'm going to say this. I'm going to be doing a webinar on this very topic tomorrow. It's down in the description. This webinar is going to go more in depth on the depreciation and the recapture. How you do bonus, how you do 179 and then what you have to recapture when you sell it. And Preston, what was her first name again? I want to make sure I refer to her. Chris.

It was Kristen.

Kristen. Okay, everybody, listen. This is very important, what Kristen's asking, Mark. If I write off this 6,000 pound vehicle and I buy it for 40 grand and I write off 30 grand and then I go sell it down the road for 20 grand, do I have to recapture some of that depreciation? Yes. Oh, well, that sucks. I better not do it. That's a bad idea. I hate this. Oh, this is terrible. No, Kristen, it's great. What if I were to give you a tax deduction from the IRS right now and three years from now you have to give it back. Would you take it? It's free gift. You can have a tax deduction today. You just have to give the tax deduction back to the IRS in three years. So you get the tax savings today and you get the use of that money. But then you have to give that tax back to the IRS in three years. Would you do it? Of course you do it. So don't dis or be pissed that you have to give depreciation back. It's a free gift. Now, I always like a write off sooner than later. It's okay. Now, all of you out there, this is probably a good point to say this. I have a certification program training enrolled agents, accountants, business owners and CPAs, attorneys around the country. This certification program is freaking amazing. We all get on a call, do training. I just got off a call a half hour ago with almost 100 of these professionals talking about different strategies. Well, I'm going to give you a sneak peek on how we dive deep. And I'm going to go into this auto deduction even more in detail tomorrow at a webinar. And I will show the depreciation recapture and how that math works. And I think you'll love it. Please make sure you join on that webinar by registering down below. And if you're interested in learning, I've got 12 modules, 80 different strategies. Holy crap. Please check it out. I promise it'll save you money. Whatever you pay me, I'm going to save that to you and save that in taxes for you this year alone. And if you're an enrolled agent, CPA accountant wanting to build your practice. It's a biz op. I have clients waiting to have more tax pros available and I'm training them every week. They're coming off the shelf. Assembly line. Love it. Okay, a couple more questions. Preston, what do you got?

Jay wants to know if my friend sells me their car for $1 yet it's worth $65,000. How do I get out of paying taxes on the sale?

How do you hold it. Let's do this again. What's their name? Preston?

Jay.

Jay. Jay. You're going to buy your friend's car for a dollar? This dumbass is going to sell you his car that's worth 65 grand for $1. Do you owe any taxes? No. Do you pay any taxes? No. You just got a kick ass deal. You just bought a car for a dollar. Now your friend has problems because he sold a car for 65 grand for a dollar. Number two, he may have depreciated and has depreciation issues. He's got a loss. And also it could even be argued he gave you a gift and has to file a gift tax return and pay gift taxes. But for you, the recipient, sign me up. If you have more friends that'll sell cars for a dollar, I'll buy them. Doesn't cost me anything in taxes. Maybe I'm missing the question. Next point.

Preston, humble and focused, bought a car for 100% Turo use. He wants to know is that a 100% write off or is there a better way to write it off?

Love what you're doing, Humble. I'm getting in the Turo business too, a little bit in my ira. By the way, my IRA is buying cars and using them in Turo. Making more money than frickin Wall Street. You want to learn about how to self direct your ira? Holy smokes. Please give my law firm a call. Get a consult on converting your Roth IRA or 401k to buy Turo cars. We are, we're helping clients do it every day. Yes, you're going to write off the car. You're buying a car to do 100% in Turo. Listen everybody, his question is, do I do actual or mileage? I don't know. How much did the car cost? How much is it new or used? Are you going to. How many miles do you think it's going to go? Sometimes it's better to go actual, sometimes it's better to go mileage. What's your overall tax situation? Are you W2? Are you looking for a bigger write off those? I don't know. Are you going to write it off? Hell yeah. Is it going to be mileage or actual? I don't know which one. And this is where. Everybody please. I'm not trying to be a freaking infomercial, but if you want good tax strategies, you talk to a tax advisor. If you want a good kitchen remodel, you talk to a contractor that does kitchen remodels. You don't go hack it out at Home Depot. So if you guys want great tax strategies, I am so grateful you're watching me today, but please know I have tax lawyers that are going to save you 10 times, 10 times whatever you pay us. Just get some professional advice and if you don't like me, that's cool, go somewhere else and get some help and get a real professional. But yeah, you're going to be able to write off 100% of that turo. One last question. Is that it is what we're doing. Oh, no more. Okay, we're wrapping it up. Everybody please sign up for the webinar. Tomorrow we're going to dive deeper into auto deductions. And I'll answer more your questions on auto deductions. I'll see you there. And don't give up. The American dream is real. Small business is real. Main street is going to.