If you buy a vehicle to use in your business, you can claim a tax depreciation deduction. In the year you put the vehicle in service, you can also claim a section 179 deduction and additional first year bonus depreciation. However, passenger vehicles are subject to limits on the total amount of the deduction you can claim, including the section 179 deduction and the addition of the first year’s deduction. The maximum amount you can claim depends on the type of vehicle.
There are basically two types of vehicles used to determine depreciation limits. One type of transportation vehicle with a gross vehicle weight of up to 6,000 pounds. Another type is trucks, vans, and SUVs for the same weight.
According to the IRS, for purposes of limitation, passenger vehicles do not include ambulances, hearses, vehicles used in the business of transporting persons or property for hire or reward, or trucks or vans that have been modified and are not likely to be used. more than the least for their own purposes.
Tax Relief The 2010 Act extended additional first-year bonus deductions of up to $8,000 for vehicles in service before January 1, 2012. However, you can claim this good depreciation for a vehicle you put in service in 2012 if you want.
You can claim the largest amount of depreciation each year for passenger vehicles, and light trucks, vans, and SUVs are adjusted for the increase. The IRS published the maximum limits for vehicles in service in 2012 in the Internal Revenue Bulletin: 2012-14. The limits for passenger cars are $11,160 for the first year, $5,100 for the second year, $3,050 for the third year, and $1,875 for each charge. If you don’t decide to claim the $8,000 depreciation for the year, the end of the first year will be $3,160.
The limits for light trucks, vans, and SUVs are $11,360 for the first tax year ($3,360 if you don’t claim the cheap credit), $5,300 for the second year, $3,150 for the third tax year, and $1,875 for each year after the tax. .
If you use the vehicle entirely for business, you can claim significant depreciation. If your business use of the vehicle is less than 100%, multiply the limits by the percentage of business use to determine the total amount deducted.
If you rent a vehicle for your business, you can deduct the rent from the firm. But how much should you include in taxes if you exceed the fixed pension plan limits? You can find these amounts in tables in the Internal Revenue Bulletin: 2012-14
Sources:
Internal Revenue Bulletin: 2012-14, IRS
Publication 946, How to Depreciate Property, IRS
Report:
- How to depreciate your business assets: voices.yahoo.com/how-depreciate-small-business-assets-769519.html?cat=3
- Qualifying Your Property for Section 179 Tax Deduction: voices.yahoo.com/qualifying-property-section-179-tax-deduction-14670.html?cat=3
- 6 Small Business Tax Changes For 2012: finance.yahoo.com/news/6-small-business-tax-change–164302679.html
