My story…

[grahamvanhellsing]

@anonomis Interesting. I’m in California. I should probably invest time in to figuring out how that works.

 

[parsonbrown]

@wolfspirit Consult with an accountant now! Then at the end of the year they may tell you buy equipment for the write off. We bought an excavator this year, we didn’t need it but we got a 60k excavator instead of paying a 60k tax bill

 

[wretched1909]

@parsonbrown That’s...not how deductions work.

 

[parsonbrown]

@wretched1909 https://www.irs.gov/newsroom/irs-is...168g-depreciation-under-tax-cuts-and-jobs-act

 

[wretched1909]

@parsonbrown My point is that deductions aren’t subtracted from your tax liability, they are subtracted from your taxable income.

So if you owe $60k, spending $60k doesn’t simply cancel that out. Otherwise taxes would never be paid.

 

[tessica]

@wretched1909 I’m just picturing George bluthe senior with his head in his hands “I’ve got the worst f***ing accountants…”

 

[cruisyazzcleanspurtz]

@parsonbrown Incurring $60k in expenses reduces your taxes by taking your marginal tax rate and multiplying it by $60k. You don't just knock $60k off of your taxes, lol.

 

[parsonbrown]

@cruisyazzcleanspurtz I don’t know exactly how it works. But my accountant said you gotta spend some money, so we spent money. That’s all I know.

 

[cruisyazzcleanspurtz]

@parsonbrown Yea, the expenses lower your net income which in turn lowers your tax basis. It's just not a 1:1 for the amount of the expense. So if you spend $60k and your tax rate is 15% then you only saved $9k in taxes.

 

[parsonbrown]

@cruisyazzcleanspurtz Whatever the case may be, I didn’t have to pay taxes and I have an asset that pays me every month.

 

[jenny12]

@parsonbrown “They just write it off!

“Who writes it off?”

“Well, THEY do!”

 

[logicalconclusion]

@jenny12 Came here for this

 

[tessica]

@jenny12 Ok. Then why don’t they call it “a tax write off”?

 

[erikkos]

@parsonbrown No, lol, just no. That is not how deductions work.

 

[zulma69]

@parsonbrown Spending 60k on an excavator doesn't mean you'll get 60k back as a tax refund or something.

It's not free - you just spent thousands of dollars for no reason.

 

[parsonbrown]

@zulma69 No, it wasn’t a direct trade but we bought a piece of equipment, wrote it off. Now we rent it out for $800 a day, $1400 with an operator.

Article 179c allows us to write off 100% of a purchase of equipment if the equipment is used for business. So my tax strategist looked at what I would owe and in Nov he advised me to buy equipment or a rental property. We had 4 rental properties under contract so we bought a piece of equipment because it was easier. Last year was the last year we can 100% depreciate a purchase. Now it’s 80%.

 

[grahamvanhellsing]

@zulma69 Oh stop. A 60k excavator can generate more in income than its costs if you have the right business setup. It lowers you taxable income in deductions, but also allows a great revenue stream.

Learn how business and deductions work.

 

[zulma69]

@grahamvanhellsing I was going by what the OP said: they didn't need an excavator

Obviously an excavator can generate income if put to work, but I purposely didn't assume OP put it to use because they literally said they didn't need it

 

[grahamvanhellsing]

@zulma69 Whatcha think they were going to do with it?

 

[zulma69]

@grahamvanhellsing Since they said they didn't need it, I literally assumed nothing. If they needed it then logically they would've bought one before tax time