Are you a Small Business Owner who is looking to Learn How to Maximize your Tax Savings using a Audi A8? Do you want to Learn what amount is tax deductible and how to qualify for maximum Section 179 and Bonus Depreciation?
In this article we will be discussing how to get Maximum(100%) Audi A8 Tax Write Off in 2021-2022.
Audi A8 Tax Write Off
In order to write off a Vehicle it need to meet many requirements for you to be able to take it as a Tax Write off. These requirements include but are not limited to
Business Percent Use
IRS requires you to keep track of your miles so you can determine if you are using your business vehicle 70% for business or 90% for your business. You are only allowed to write off the amount that is used for business and not for personal.
Ordinary and Necessary
In order for the Audi A8 Tax deduction to be allowed, it need to be ordinary and necessary in the field of work you are in.
For example in construction, you will need pickup to haul materials. That will be considered Ordinary and Necessary.
Furthermore, If you are a Luxury Home Realtor, then a Luxury SUV may be a tax write off as your Customers Expect you to take them out in a luxury vehicle showing them $5 or $10 million dollar properties.
Gross Vehicle Weight
If the Vehicle is 6000 pounds or more, then you are allowed to write off full value of the vehicle as long as its 100% business use and placed in the service in the year you are doing the tax write off for.
If any vehicle is less than 6,000 pounds max you can do in 2022, is $18,200 first year and remaining over 5 year period.
Audi A8 Lease Vs Purchase
Lease Example & Calculation
If you lease a vehicle, you get to write off the actual amounts you paid for example if you lease Audi A8( 36 Month Lease) and Put $3,000 Down Payment(Lease Buy Down) and $1000 Per month for the entire year. Then you write off the lease as following:
Lease Deposit $3000 Divided by Lease Term 36 Months So you will get $1,000 Per year
Yearly Lease Payment: $1000 Times 12 Months is $12,000
Total Tax Write off $1,000 Plus $12,000= $13,000 for the year.
Purchase Example & Calculations:
If you purchase the Vehicle for $100,000 and put down $20,000 and finance the remaining over 60 months the calculations will work the following way assuming 100% business use:
Since this purchase qualify for vehicle equal or more than 6000 pounds, you can either deduct the entire $100,000 in the first year(if you have enough profit) or deduct a portion( Example $60,000) of it and spread the remaining($40,000) over 5 years.
You can take Standard mileage deduction of 58.5 cents( in 2022) a mile but we do not recommend that as the 1actual deduction in this case will significantly more than Standard mileage deduction.
Audi A8 Gross Vehicle Weight (GVWR)
2022 Audi A8 Gross Vehicle Weight(GVWR) is 6,140 lbs.
Hence, Audi A8 Qualifies for the 6000 Pound or more requirement(Per IRS) and using a combination of Section 179 and Bonus Depreciation you can get 100% Deduction on a Vehicle purchase price including Fees and Sales Taxes.
Audi A8 Tax Write off California
California has very specific rules pertaining to depreciation and limits any Section 179 to $25,000 Maximum per year. So for example, if you purchase a vehicle for $100,000,
you can write off $25, 000 as Section 179 in first year and remaining amount of $75,000 in this example has to be spread over 5 year period.
While IRS allows Bonus Depreciation, California doesn’t allow Bonus depreciation and the entire amount is added back to your State return where it is taxed.
Audi A8 179 Deduction
Internal Revenue Code, Section 179 Deduction allows you to expense up to $25,000 on Vehicles(One year) that are between 6000 Pounds and 14,000 Pounds or More in the year they are placed in service.
If you are looking to write off the entire purchase price of the vehicle, look into Bonus depreciation rules that were passed under TCJA. We have more details below.
To learn more about Section 179 See IRS Section 179 Details here
Audi A8 Bonus Depreciation
Bonus Depreciation has been significantly improved by the Tax Cuts and Jobs Act.
Under new TCJA, Bonus Depreciation allows you to deduct a specified percentage of the cost of assets in the year they are placed in service.
This deduction allows you to take your profit to negative as compared to Section 179 which only allows you to break even or make your profit zero.
For vehicles such as Audi A8 that are 6000 pounds or more, can be deducted 100%(for Federal tax purposes) in the year purchased and placed in service.
Tip: Under Bonus Depreciation rules, you can even purchase a Used Audi A8 and use Bonus Depreciation as well.