Table of contents:
How to Write Off A UTV on Taxes
13 January 2023
If you are a farmer, a UTV is an important piece of farm equipment to have. The problem with business equipment is that they contribute to your tax obligations, which can be significant in most cases.
However, some farm equipment, such as UTVs and side-by-sides, can be written off on taxes, reducing the amount you pay for taxes on them. The ultimate aim of a UTV write-off is that it helps cut back on the cost of running your business.
If you don’t know how to file for a UTV tax write-off, here is a detailed guide:
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Why Write-Off Your UTV?
Filing a tax write-off helps cut back on your taxes to bring you to a lower tax bracket, so you don’t pay as much as you would pay to the government. Writing off expenses applies to small businesses, individuals, corporations, and self-employed. Hence, you can write off your UTV on taxes if you fall into any of these categories.
Although the IRS determines which expenses are eligible for a write-off, some expenses are deductible.
UTV Write-Off Options
There are different options and ways to file a UTV write-off on taxes, but it is important to know which tax code to file it under. Although this write-off is available in the U.S., your state determines the right way to file it. Hence, it is important to understand taxes to save money on your UTV.
Here are two major ways to write off your UTV on taxes
Section 179
Regardless of your state, you will likely write off your UTV under section 179 of the IRS tax code. The section says a business can deduct the purchase price of equipment bought during the past tax year.
With this, when you buy a piece of equipment, such as a UTV, for your business, you can deduct the total price from your gross income while filing for taxes. This is to encourage businesses to acquire the necessary equipment to grow their businesses.
Besides your UTV, most of your equipment is also qualified for this write-off. Plus, the equipment can be new or old, but it must be new to your business within the tax year.
Limitations: While writing off your UTV under Section 179 might sound great, it is worth noting that it comes with a few limitations. One, there is a monetary limit that says only equipment below $1 million is eligible to qualify for the write-off, and the overall write-off for a business should not exceed $2.5 million. Another limitation of this section is that for a piece of equipment to be eligible, it must be used for business purposes at least 50% of the time.
Bonus Depreciation
Another means to write off your UTV on taxes is through bonus depreciation. This started at a rate of 100% and goes down every year to reach 20% in 2026.
Filing a UTV write-off under bonus depreciation is a bit similar to section 179 in terms of percentage of use for business, as it also demands that equipment be used for at least 50% of business use.
This is a more useful option than Section 179 for larger businesses, as they will likely cross the maximum limit for section 179. Bonus depreciation has no maximum limit.
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