How to Deduct Your Car Purchase in 2014

Buy an SUV for your business for the biggest vehicle tax deduction

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Section 179 deductions are the tax magic that let you fully deduct capital assets in the year your purchase them. By combining Section 179 and the depreciation rules regarding purchasing automobiles for business, you can save a good amount of money.

Vehicles have special depreciation limits based on their size. Passenger cars have a total depreciation limit of $3,160, while trucks and vans have a limit of $3,460. Sport utility vehicles (SUVs) and trucks over 6,000 pounds, however, don’t have this depreciation limit- and the full $25,000 Section 179 deduction can be used for these vehicles. This gives you the biggest tax deduction when you buy a vehicle.

This website has a great list of vehicles that qualify for Section 179, including the Cadillac Escalade and the Mercedes-Benz GL-Class SUV: Awesome Vehicles that Qualify as a Write Off

Tweet it! Buy an SUV for your business for the biggest vehicle tax deduction. http://bit.ly/1l5qSKw @BetteHochberger

Why To Track Mileage

track business miles to maximize auto expenses

If you use your car for your business your CPA has probably told you to track your mileage. The reason is that there are two way to calculate the auto related costs for your car- actual expenses and standard mileage rate- and both rely on knowing the number of business miles you drove for the year. The great thing here is the IRS lets you chose the method that leads to a greater deduction.

 

Actual Expenses

You can keep track of and deduct the costs for actual auto expenses. These expenses would include gas, oil, repairs, tires, insurance, registration fees, licenses, and lease payments. If you use your car for anything personal your deduction is reduced. The way to calculate your business use is to track your business and total miles for the year. For example, if you drove 10,000 for business and 15,000 total, your business use percent would be 10,000 / 15,000 = 66.67% and you would only be allowed to deduct 66.67% of all of your auto expenses.

 

Standard Mileage Rate

For 2014 the standard mileage rate for business is 56 cents per mile. To determine your auto expenses using the standard mileage rate you multiply the rate times the number of business miles driven. For example if you drove 10,000 miles for the year your auto expense deduction would be 0.56 x 10,000 = $5,600.

 

Have trouble keeping track of your driving? There are aps you can use to make it easier. Check out Triplog that tracks your rides using GPS.

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Tweet it! Track biz miles to maximize auto expense deductions. Use aps to make record keeping easier. http://bit.ly/1nS5F5A @BetteHochberger