SEARCH


PK Tax Services, L.L.C.
PK Tax Services, L.L.C.
  • Home
  • Services
    • 2021 Tax Season Documents for 2020
    • Year-End Tax Planning
    • FAQs on Mixed Marriages
  • Resources
  • Meet the Company
    • Videos
  • Blog
  • Contact
  • Client Portal Instructions

BLOG

Depreciating a Vehicle - Know your luxury auto limits

8/23/2016

0 Comments

 
Picture
Looking to purchase a new business vehicle? Choose carefully. The limit on the amount that can be deducted for depreciation varies by type of vehicle. Under §280F, passenger automobiles, trucks and vans are subject to special annual depreciation limits, known as luxury auto limits. These limits begin to apply for cars costing at least $19,000.
If a vehicle is four-wheeled, used mostly on public roads and has an unloaded gross vehicle weight of no more than 6,000 pounds, the car is considered a passenger automobile. Similar characteristics apply to vehicles that are considered light trucks and vans. However, for a vehicle to be considered a light truck or van, it must have been built on a truck chassis and have a loaded gross vehicle weight of no more than 6,000 pounds. The limits will vary, depending on whether the vehicle purchased is technically a passenger car, light truck or van or over the 6,000-pound threshold. Generally speaking, due to the luxury auto depreciation limits that apply only to passenger vehicles, larger vehicles, such as light trucks and vans, will provide greater tax savings.
 
Generally, vehicles rated under 6,000 pounds will also qualify for a 50% bonus depreciation and an additional §179 deduction. The special 50% bonus depreciation applies to all new passenger cars that are used over 50% for business use. This bonus depreciation limit increases the regular depreciation limit by $8,000. The §179 deduction applies to all passenger auto­mobiles as well, but §280F limits will apply to this type of deduction.
 
Any vehicle that is rated over 6,000 pounds is not subject to the regular or bonus depreciation limits. In addition, for any vehicle over the 6,000-pound rating, the §179 expense deduction is $25,000. There are certain restrictions that may apply, however. Be sure to consult me about the make and model of your vehicle to accurately determine your depreciation limit.
 
Please note: If the vehicle is not used 100% for business, the depreciation limit will be reduced by multiplying the luxury auto limit by the percent of business use. The depreciation limit does not apply to any vehicle costing less than $19,000.

 
                              Automobiles          Light Trucks & Vans

1st Year               $3,160                      $3,560

2nd Year             $5,100                      $5,700

3rd Year              $3,050                      $3,350

4th Year              $1,875                      $2,075

0 Comments



Leave a Reply.

    Picture
    Pat Kolodziej
    ​C.P.A., M.S.T.


    Categories

    All
    IRS Tax News
    Just For Fun
    Tax Tips For Businesses
    Tax Tips For Individuals


    Archives

    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015

Pat Kolodziej, CPA, MST
Managing Member
PK Tax Services, L.L.C.

87 South McLean Boulevard, Suite A
South Elgin, IL 60177


Phone: (224) 227-6061
Cell: (847) 858-5074

Fax: (224) 227-6059
Contact Us
Client Login
Picture
Picture
Picture
Picture
Picture
Picture
BACK TO TOP

Proudly Serving: South Elgin Illinois, St. Charles Illinois, Elgin Illinois, Geneva Illinois, Batavia Illinois, Bartlett Illinois, West Chicago Illinois, Algonquin Illinois, Crystal Lake Illinois, Aurora Illinois, etc.

© 2017-2020 PK Tax Services, LLC  |  All Rights Reserved  |  Website Created by LislDesign.com

PK Tax Services, L.L.C.