Almost Tax time again

Discussion in 'Lawn Mowing' started by bdemir, Feb 13, 2000.

  1. bdemir

    bdemir LawnSite Senior Member
    Posts: 610

    one more month and it will be time to do the taxes. Its my first year doing taxes in lawncare and i would like to ask a few questions. My accountant says i cant deduct my tools all at once and i have to deduct my tools over a four year period. Is this mandatory. Also i met a guy who years ago helped kids get off drugs years ago and they would allow him 8 thousand dollars write off for each kid. They no longer do this with kids but will give a 9k deduction for ex cons. The downside of course is youll be working with a criminal.Im not that desperate but i wnated to ask everyone if there are ways to legally help lower taxes in the lawncare business.
     
  2. Charles

    Charles Moderator Staff Member
    Posts: 7,950

    My accountant told me a just last month. That she was writing off my new equipment totally the first year. Don't know who is right on this one.
     
  3. jeffclc

    jeffclc Guest
    Posts: 0

    I think that you can deduct upto $18,500 worth of tools/equipment in its first year. Talk with your accountant. I did know the line item number for this, but it escapes me at this time.<p>One word of caution in doing this- If you make a larger than normal amount of purchases this year, and are not planning any major purchases next year, you may be in a situation with a larger tax bill. If you depriciate the item over a number of years, you lower your tax bill in each of those years. <p>Get a good accountant, one that will help you figure out what is best for your individual situation. Have some idea of what your plans are for the next few years also. <p>On another tax related note, Do any of you guys deduct your internes access? I do use it for business, my webpage, communicating with customers/suppliers via email, and reading this very forum. I wouldn't say that my internet use is 100% business, but there definatly is a portion of it that is. I don't want to raise any red flags with the IRS over a minor deduction.
     
  4. mountain man

    mountain man LawnSite Member
    Posts: 141

    The only equipment that you can write off all in one year is equipment that you can argue only has a one year life. Large items like trucks, mowers, trailers, etc must be depreciated under a depreciation schedule unless they are leased. <p>Also remember that if you are incorporated then all tax returns for the business are due by March 15. I meet with my CPA at least quarterly so that I make sure all of our ducks are in a row. It's too late to change things from last year but it is time to set things up for this year so as to not get burned by taxes if you can help it.<p>
     
  5. Charles

    Charles Moderator Staff Member
    Posts: 7,950

    Mountain Man, Why would a CPA tell me different. I have been using her for 10 yrs now. She said there has been a change in the law and you can write off( I don't know what the limit is) New equipment totally the first year. She said I could write off the Lazer and new mower deck.
     
  6. mountain man

    mountain man LawnSite Member
    Posts: 141

    Good point Charles. Under Section 179 of the tax code you can deduct up to $17,500 of expenses each year. So if you have minimal expenses and want to deduct a large mower that is wise.<p>My expenses are high enough to where I would not get the full value of my mowers if I put them in under Section 179. If your total expenses are under $17,500 then go for the total deduction up front. <p>If you add a ZTR to a Section 179 expense then it is very likely your expenses may get close or exceed the $17,500. <p>Alot of times when we go see an accountant, attorney, insurance agent, phone company, etc, we take there info as the way it has to be done. I think it is critical to do some research before going in. I have found that alot of times that I save myself money or get extra benefits just because I did my homework first. I think one of the worst things we can do is just give a stack of receipts to the accountant and say go at it and tell me what I owe. This forum is great because we can discuss issues directly related to our industry that an accountant, attorney, etc may not be as aware of or just has not had time to think about.
     
  7. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    For 1999, you can write off up to $19,000 of new equipment (mow equip, small power equip, hand tools, trailers, computers, and more). This is taken as a section 179 deduction on Form 4562. There are conditions: mainly your range of business income from Sched C.<p>The only tools you cannot expense on sec 179 is a motor vehicle, and the depreciation recovery for a vehicle takes so long that you are usually better off leasing for 5 years, then buy and depreciate.<p>Section 179 is mainly for small business, with yaerly purchases in this range.<p>If your accountant cannot explain why sec 179 doesn't apply to you, you need a new accountant.<p>----------<br>Jim<br>North central Indiana<br>
     
  8. lbmd1

    lbmd1 LawnSite Senior Member
    Posts: 462

    Jeff is correct on the one time write off $18,000 deduction.. It helps you the first year or two but if you continue to grow and stop purchasing major equipment say the third year out, it could hurt you. Say you purchase a larger mower year one ($9000)and finance it over say 3 years. If your payments are $330 roughly a month (note I said roughly) then year one you are okay. But in year 2 and three, you cannot take the deduction on that equipment or your payments totaling $7900. It all depends on your gross income from the business. I wouldn't take it if your income is anywhere from $20-$40,000 a year gross because you'll probably have other deductions that will help you out. Be aware that it will catch up with you the year that your gross sales increase dramatically and that year is the one that you don't have any major purchases in. And on the internet deduction, you could probably deduct the whole bill especially if you have a web site, if you have it on you business line, seperate from your home phone line. Otherwise you are allowed a percentage.
     
  9. bdemir

    bdemir LawnSite Senior Member
    Posts: 610

    I would like to thank everyone for the advice and the help. I have purchased all of my equipment this year and im thinking of doing it over four years but some of the equipment might not last that long because its old. But if i do it all this year then i will be stuck with nothing for the other years. But i will figure what is best for me and make the choice. Thanks for the help.
     
  10. bdemir

    bdemir LawnSite Senior Member
    Posts: 610

    I would like to thank everyone for the advice and the help. I have purchased all of my equipment this year and im thinking of doing it over four years but some of the equipment might not last that long because its old. But if i do it all this year then i will be stuck with nothing for the other years. But i will figure what is best for me and make the choice. Thanks for the help.<br>
     

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