How to set up an escrow account Tax deductible???

A maintainence account is an asset. When you spend that money, it becomes an expense. Expenses are deductible. Transferring money around usually is not.

 

I dont think its possible like Bean said. However you can always purchase parts or tools to keep on shelf if you have the room for future needs. Heater blower motors, wiper motors etc aren't a bad thing to keep an extra on hand.

 

It's called capital reserves, it is taxable, any money you use for a legit repair or expense is deductible.

 

If you have a LLC you keep all you can in the compare name, taxes will be less. If you don’t run under a LLC then the money you save for maintenance is treated like regular income.

This is the part that hurts lease purchase drivers, the maintenance fund they may not have full control of is treated as income on their 1099 even though they may lose all or part when they quit.

 

Only if your business is incorporated or set up as an LLC. Otherwise it's income.

 

Capital reserves are taxable in the year they were put in, any legit expense is a deduction, you do not have to be incorporated to have reserves.

 

From a tax standpoint, capital reserves must be held in a separate account and not co-mingled with funds from your operating account. The problem with having a reserve or escrow account for maintenance is that the probability of the money being in a high interest account for a long enough period to do you any good is slim. Capital reserve account are generally something you set up to help fund new equipment. Say if you want to buy a new truck 3 to 5 years from now, you would create an escrow account that you added to monthly with a better interest rate than a normal account. Interest earned on that account would be taxed at a lower rate than regular business profits. The trick is that you can't touch that money if you need it for anything other than buying a new truck. If you want money set aside for maintenance, I would simply set up a flat amount monthly on your accounting software that will keep track of your balance for maintenance at any given time in your regular operating account.