Tax break for GVW?

[detjoe]

I though we could have some access to a tax break for our GVW? Or do we have to have bought it for a business? Just starting to do taxes and every dollar I get back goes toward mods so I want every break that I can...

 

thanks

joe

[SS--BLOWN]

Here's the deal on the tax break (I am an attorney, not a CPA, but I have done this with 2 vehicles so far).

 

Basically, section 179 of the tax code allows business owners who use a personal vehicle in their business to get special tax treatment if the company does not reimburse them for the vehicle expenses. This is popular with real estate agents who drive all over town showing houses, etc.

 

Rules for 2004 are that you need to own (not lease) and have put the vehicle "in service" during tax year '04 and you must use the vehicle at least 50% for business purposes. Your commute from home to work and back does not count as a business use, and you may be required to provide documentation of your travel, so keeping a log is recommended.

 

You can accelerate the depreciation of the first $25,000 of the vehicle purchase price, plus some bonus depreciation (talk to your accountant) based on the percentage of use that is in connection with business purposes. What this means is that the acceleration of this depreciation (it works out to be about $31K for a new SSS used 90% for business) becomes an expense that you can offset against personal income.

 

You also get to expense all maintenance, car washes, gas, insurance, repairs, interest expenses incurred each year based on the ratio of business usage.

 

Penalties apply for taking the vehicle "out of service" (e.g., selling it) prior to having gone through the five-year depreciation cycle.

 

Hope this gives you enough info to either talk to an accountant or forget the whole thing. This "loophole" gets a lot of negative attention in the press from time to time, but there are actually only a few people in a situation to fully take advantage of it and there are lots of hoops to jump through to qualify.

 

For more info, you could Google "section 179 6000 GVWR" and get plenty of additional details from CPA websites and such.

 

MJM

[detjoe]

you rock. I love SSS.com b/c we share so much good info. I belong to a site for my wifes allroad and it sucks, nobody gives the quality of info given here...thanks again

 

like most tax stuff...try to figure it out or try to forget it

I will bing this up when it is closer to tax time.

 

Is it easier to get this break if your milage is low, ie the percent driven for business can be way lower due to the fact you only put x miles per year...just a thought?

[hankc350]

That law changed in october. Go read the updated PDF on IRS.GOV

[SS--BLOWN]

That law changed in october.  Go read the updated PDF on IRS.GOV 

<{POST_SNAPBACK}>

 

True, the reduction in the amount of depreciation you can accelerate went down at the end of October, but there is still a significant tax benefit available if you can take advantage of it. It is now $25K per vehicle plus some bonus percentage.

 

MJM

[PewterC3]

When comparing the "standard" deduction for a vehicle under 6000lbs GVWR to the next class up, 6001lbs GVWR up to (8K or 10k?).... it lowered my taxes roughly $1600... so I've been claiming the 6001 and over class for a few years now.