100% tax write off for lease payments, but...

If you spend $29k on lease payments, all of it is a business expense.

Determining how much of that you would get back on your tax return is more complicated.

Let's say you make $60k a year as an owner operator. The lease payments are $30k a year (obviously you would have more deductions than just lease payments...but we will use just the lease payments for the example.)

$60k income - $30k expenses = $30k profit.

You would have to pay taxes on the profit.

Hope this helps some....

 

To explain a bit further, using Accountingfortruckers numbers.
The tax savings would be that which you would have paid on the 30,000 you were able to write off.
As an example, if your taxable income is $30,000, you will pay X amount of taxes. Let's say it's 15%, or $4500.
However, the higher your taxable income, the higher your tax rate becomes. Let's say the tax on the additional income averages 26%. That means you have saved $7800.
The trick with any tax deduction isn't to make an expense deductable. That only means you're giving the money to someone other than the government. The trick is to make it profitable to you.
An example is where you can write off certain expenses as a business owner that wouldn't be done if you're just an employee. An example would be a home office. If you have a 2000 sf house and use a 100sf room EXCLUSIVELY for business...an office, then you can write off 5% of your property taxes, utilities and some other expenses in maintaining that home. If you have a total of $10,000/yr in these expense, that means you can deduct $500 and with a 15% tax rate, that gives you $75 in tax savings. This is for an expense that you would have whether you have your own company or not.
There are many other expenses that fall into that catagory. What you should do is get your numbers together, then meet with a tax professional who is familiar with the trucking industry. Pay for their time. Probably cost you one hour. they can give you a wealth of information that will help you make your decision.
(that meeting is tax deductable too)

 

To summarise the less profit you make the less tax you will pay personally i'd rather pay more tax because it means i'm also making more profits.

 

You are not getting anything back unless you have paid in something.

If you go into a lease purchase program you won'have to worry about taxes, you won't make much if any.

 

How you won't make money on lease if is 100%write off

 

Because you’re still paying the high lease payments. You just don’t pay the tax on the portion of your income that goes towards the payments. You’re not getting a free truck by writing off the payments.

 

Most 'lease purchase' units are not new trucks.

You never will know how many 'potential' owner operators farted in that seat before you tried to pay it off.

You will pay for anything they did/didn't do as they realized they were loosing the truck...

It is like going to Vegas; the odds are in the favor of the house, not the person dropping in dollars and pulling that handle.

 

All of your business costs (expenses), like the lease payments, are deducted from your revenue. You will pay income takes on the difference between your revenue and your expenses.

If the trucking company your are leasing the truck from only gives you enough trips to only pay for the truck lease payments you won't make any money. The money you get each week is a settlement. It is NOT a paycheck. Out of that settlement check yo must pay your expenses, lease payments, fuel payments, fees for maintenance and ELD. You are only guaranteed to keep whatever is left over after you pay all expenses and then pay the taxes. You can easily work all year and make no money after expenses and owe taxes.

 

A company controller used to remind everyone that writeoffs mean you had to spend it first!

I still like the idea of thirds...often used to split 'driver' from the settlement when figuring some insurances.

The truck settlement is split in 3, one third to the owner, one third to the truck, and the remainder to the driver and I've seen owner operators over the years that managed their solo truck business in that manor.

They kept their take home, including saving up quarterly tax payments, etc. to a third, banked a third for truck payments/maintenance and used the remaining third as business operating expenses.

To a fault they had paid for their ride, it was maintained in first class condition and if the engine crapped the bed, had enough in that kitty to pay for the rebuild.

They also had nice homes and decient personal transportation +/or toys, etc.

They were businessmen; when you offered them a load, you could see the mental calculations confirming if they wanted it or not.

They also had good financial advise and paid as little in income taxes as possible.