Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for December 4th, 2007

New SUV & Sec. 179 Income Limits

Posted by taxguru on December 4, 2007

Q-1:

Hi,

Very impressive website. I have a question and would be grateful if you can help.

I am an independent contractor on the side and also have a full time job. My independent contractor job pays me without tax deductions and I am expected to pay my own taxes. I have made about 15,000 this year. I am thinking of buying an SUV that meets the IRS rating of over 6000lbs for my independent contractor job, but I am worried that I might not have made enough to deduct the 25,000 IRS deduction. Can I add  my AGI from my full time job to qualify for this deduction or is there another way of doing this. 

 

thanks.

 

A-1:

I have covered this point on several occasions.

It is possible to use other kinds of earned income, including from W-2s, to allow a higher Section 179 deduction than just the net income showing up on your Schedule C. 

However, this is not something you should try figuring on your own.  You need to be working with a professional tax advisor, who will be able to help you properly avail yourself of the hundreds of tax issues that you would most likely screw up on your own.  Any good professional tax advisor will save you much more in taxes than his/her fee; so you would be nuts to tackle your 1040 by yourself. 

Likewise, a good tax advisor may see that it would be advantageous for you to operate your business in a corporation instead of as a Schedule C sole proprietor, another topic I have discussed on countless occasions.

Good luck.

Kerry Kerstetter

 

Q-2:

Hi,

Thank you very much for your reply. I checked your website for tax pros in North Carolina but none was listed. Do you know of any in North Carolina. Thanks again.

 

A-2:

Those are the only names I have.

As I have said in my tips for selecting a tax advisor, as well as in countless blog posts, choosing tax pro merely based on geographical proximity is misguided.  A good tax pro could be anywhere in the country and give you even better service than someone who happens to be right next door to you. 

Good luck.

Kerry

 

 

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