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Can freelancers deduct business vehicle over 6000 pounds?

TL;DR

Freelancers can deduct the cost of a business vehicle over 6,000 pounds using Section 179 or bonus depreciation, subject to certain limitations.

Detailed Answer

Freelancers can deduct the cost of a business vehicle over 6,000 pounds if it is used for business purposes. The deduction can be taken under Section 179, which allows for immediate expensing of the vehicle up to a certain limit, or through bonus depreciation. The vehicle must be used more than 50% for business, and the deduction is limited to the percentage of business use. For example, if a vehicle is used 70% for business, only 70% of the cost can be deducted. Additionally, there are specific limits on the amount that can be deducted for luxury vehicles.

Where to Put It on the Tax Form

Report on Form 4562, Depreciation and Amortization, and carry the deduction to Schedule C, Profit or Loss from Business.

Real World Example

A freelance photographer purchases an SUV weighing 6,500 pounds for $50,000. The vehicle is used 80% for business. The photographer can deduct $40,000 (80% of $50,000) under Section 179, subject to the annual limits.

Calculation Required

A calculation is required for this deduction.

Calculate the deduction by multiplying the cost of the vehicle by the percentage of business use. Apply Section 179 limits and bonus depreciation rules as applicable.

Audit Risk & Documentation Tips

Keep detailed mileage logs showing business versus personal use, purchase receipts, and documentation supporting the business purpose of the vehicle. Be aware of IRS scrutiny on luxury vehicles and ensure compliance with business use requirements.

IRS Reference

IRS Publication 946, How to Depreciate Property; IRS Code Section 179

Relevant Industries

FreelancersSmall BusinessConsultantsReal Estate Agents

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 15, 2025

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