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Information about Write Off

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A written-off BMW. The cost of repairing this accident damaged car exceeds the market value of the car; it is less costly for the insurers to pay out the market value than to pay for repairs.
A write-off may refer to either an accounting write-off or an income tax write-off. It is also a term commonly used in vehicle insurance to describe a vehicle which is cheaper to replace than to repair, known in the U.S. as being a totaled car.

Accounting

In business accounting, the term write-off is used to refer to an investment (such as a purchase of salable goods) for which a return on the investment is now impossible or infeasible. The item's potential return is thus canceled and removed from ("written off") the business's balance sheet. Common write-offs in retail include spoiled and damaged goods.

Banking

Similarly, banks write-off bad debt that is declared uncollectable (such as a loan on a business that is now defunct), removing it from its balance sheet.

Income tax

In income tax calculation, a write-off is the itemized deduction of an item's value from one's taxable income. Thus if a person has a taxable income of $50,000 per year, a $100 telephone for business use would lower the taxable income to $49,900. If that person is in a 25% tax bracket, the tax due would be lowered from $12,500 to $12,475. Thus the net cost of the telephone is $75 instead of $100.

The phrase "writing off" is sometimes used in a way that suggests the item will be free. The value of the item is only deducted from taxable income, not from the tax itself. The term is also loosely used to refer to an item which is intended for personal use but which will be deducted ("written off") as a business expense. Some individuals attempt to amass large numbers of "write-offs" in order to reach a lower tax bracket and increase the effective size of the deductions.

Compare with

Vehicle insurance (or auto insurance, car insurance, motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents.
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In formal bookkeeping and accounting, a balance sheet is a statement of the book value of all of the assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a financial year.
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In formal bookkeeping and accounting, a balance sheet is a statement of the book value of all of the assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a financial year.
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Economic policy
Monetary policy
Central bank   Money supply
Fiscal policy
Spending   Deficit   Debt
Trade policy
Tariff   Trade agreement

Finance
Financial market
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itemize their deductions (from a list of allowable items) and subtract those itemized deductions (and any applicable personal exemption deductions) from their AGI amount to arrive at their taxable income amount.
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Tax brackets are the divisions at which tax rates change in a progressive tax system (or an explicitly regressive tax system, although this is much rarer). Essentially, they are the cutoff values for taxable income — income past a certain point will be taxed at a higher rate.
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Amortization or amortisation is the process of decreasing or accounting for an amount over a period of time. Particular instances of the term include:
  • Amortization (business), the allocation of a lump sum amount to different time periods, particularly for loans and

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Depreciation is a term used in accounting, economics and finance with reference to the fact that assets with finite lives lose value over time. (There is also a separate use in international finance to refer to a reduction in the exchange rate of a currency - see Depreciation
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Depletion may refer to:
  • Depletion region
  • Depletion width
  • Grain boundary depletion
  • Oil depletion
  • Ozone depletion
  • Resource depletion
  • Sustainability depletion
  • Tax depletion

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Totaled is a term used in the insurance industry. When a vehicle is damaged, if the cost of repairs is greater than the total value of the vehicle post-repair, it is said to be totaled.
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