Using a vehicle for your business may qualify you for an additional tax deduction.
The Ford Explorer is a great SUV, that many businesses may want to use.
When picking out an SUV to use for your business, paying attention to the gross weight can make a huge difference.
How Much Does a Ford Explorer Weigh?
A 2021 Ford explorer has a Gross Vehicle Weight Rating of 6,160 pounds, enough to qualify as a heavy vehicle on section 179 of IRS tax forms. SUVs can receive a maximum deduction of $26,200. Business vehicles have different deduction limits based on vehicle weight and other qualifications.
Car specifications, as well as the purpose of the vehicle and the way you use it, will affect how large of a deduction you can receive from filing section 179.
The Ford Explorer is a really versatile vehicle that can be used in all sorts of situations.
It is rugged enough to handle harsh conditions but is also modern and comfortable for the everyday driver.
You can carry lots of passengers, or carry lots of cargo, depending on your needs.
This SUV strikes the perfect balance between a van and a truck.
The 2022 Ford Explorer has 7 different model options to really customize the vehicle to what you need.
The base model is really affordable, starting at $33,245.
The cheapest option will give you 300 HP and 310 torque, but there are definitely improvements available if you are willing to spend a little more.
The base model has a maximum loaded trailer weight of 5,300 pounds.
If you are looking at vehicle weight for tax deductions, you need to find the gross vehicle weight rating.
For the Ford Explorer, this is 6,160 pounds.
You can ignore that trailering weight and the curb weight.
As for the inside, you can seat up to 7 people, with the optional third row in place.
The third row could instead be flipped down to store more cargo in the back.
Every Ford Explorer will have the basic comfort and convenience features that you would expect and need.
Upgrading your package will provide a much more luxurious experience with all the latest technology and safety features.
With various package options, you can get intelligent four-wheel drive and a terrain management system to help manage all sorts of driving conditions.
There are also special features to help with towing.
It is totally worth the upgrade if you are planning on having a trailer attached most of the time.
Certain packages include rolling stability support and an extra powerful engine system for easy towing.
Section 179 is part of form 4562 that business owners use to receive deductions based on the depreciation of property.
The maximum total deduction that a business can get from this section is $1,050,000 but the maximum deduction for individual pieces of property varies.
Most commonly, the property claimed in this section will be things like machinery, technology, vehicles, or office equipment.
There is a price range that the purchased property must fall into, and it must be in active use during the appropriate tax year.
Additionally, the property needs to be used for the business at least 50% of the time when compared to personal use.
The percentage of business use determines the percentage of the cost of property that is eligible for deduction.
This section is mainly designed for small businesses rather than large corporations.
If a business purchases more than $2,620,000 worth of equipment, they are no longer eligible to file section 179.
This section gives an immediate full refund for depreciation instead of the business receiving multiple smaller deductions over the course of many years.
Filing a vehicle
Vehicles are commonly reported on section 179 since they have significant depreciation.
Different types and weights of vehicles will receive different deduction eligibility.
As of 2021, the maximum deduction that an SUV, like the Ford Explorer, could receive is $26,200.
The IRS uses the gross weight of 6,000 pounds as the dividing line between passenger vehicles and other, heavy vehicles. Since the Ford Explorer has a GVWR of 6,160 pounds, it fits into the second category.
However, the $26,200 limit doesn’t apply to all vehicles over 6,000 pounds.
If the vehicle also has a cargo area or can seat more than 9 people behind the driver, it will have a different limit.
If you are wanting to file your Ford Explorer or any other eligible vehicle, you will need to track your mileage throughout the year.
Specifically, you will need to track the mileage used for the business and any mileage used for personal or other uses.
In section 179, you will report the percentage of vehicle use that is for the business, and that will change your deductible.
To find the basis for depreciation, that determines your tax deduction, multiply the cost of the vehicle times the percentage of business use.
Then, subtract any credits or deductions that apply to you.
This might include credits for enhanced oil, alternative fuel, or disabled access.
Passenger vehicles have a significantly smaller deductible maximum.
This is why it is so important to pay attention to the weight of an SUV that you are purchasing for your business.
4-wheel vehicles that weigh under 6,000 pounds are considered passenger vehicles, except ambulances, hearses, and trucks or vans that have undergone specific modifications.
The maximum deduction for a passenger vehicle varies significantly based on the year it was purchased, the year it was put into use for the business, and how many years the business has been using it.
The absolute highest maximum is $16,400 which is still much lower than what you could get for a heavy SUV like the Ford Explorer.
The lowest maximum for passenger vehicles is $1,675 for vehicles that began use in 2004.
Any vehicle, no matter its weight, must be used for the business more than for any other purpose.
Business use is calculated by taking the miles used for the business, divided by the total mileage.
The result needs to be more than 50% to qualify for section 179.
Additionally, the vehicle must be purchased or financed and then put into use before filing your taxes.