End of YEAR Car-TAX breaks

Does BUYING a CAR Dec. 31 save you money on taxes? We are fast approaching the end of year tax spend, which befalls many business owners and bonus babies. Congress has not officially passed the sales tax write-off rules of past, which allows consumers to deduct the sales tax on large items like cars and trucks, on their 2015 tax return. Businesses have for years used Section 179 to spend on much needed business equipment, that has not changed, although the caps for specific businesses  or budgets should be discussed with your accountant BEFORE you go crazy.

No more 6,000 lb. bonus.

The CARS and TRUCKS BUYING BINGE of yesteryear, also known as the FARM BILL, allowed for the purchased of vehicles weighing over 6000 lbs. to be categorized as business equipment, resulting in a boon for Chevy Suburban, Land Rover and Ram truck dealers.  The farm bill went away, and as such, business owners are left with Section 179 or the rules of lease versus buy to determine the best way to spend on vehicles this year.

FROM THE IRS WEBSITE:

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

• 57.5 cents per mile for business miles driven, up from 56 cents in 2014
• 23 cents per mile driven for medical or moving purposes, down half a cent from 2014
• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law. Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates. A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously). Details on these and other special rules are in Revenue Procedure 2010-51, the instructions to Form 1040 and various online IRS publications including Publication 17, Your Federal Income Tax. Besides the standard mileage rates, Notice 2014-79, posted today on IRS.gov, also includes the basis reduction amounts for those choosing the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing an allowance under a fixed and variable rate plan.

Biggest Bonus of  2015 0% while it lasts.

2015 has the best window of opportunity in low interest rates while they last. With auto manufacturers and credit unions vying for good credit clients, a FICO AUTO score of over 700 is a win, even if you are using the vehicle for business.  With rates destined for blue sky, make your best deal on a purchase. If the car you want is over the federal tax guidelines for the most advantageous depreciation. Consider leasing. The low money factor is still of benefit, and you can own the vehicle at the end of the lease for the residual or buyout. The tax advantages may be more beneficial to you. Discuss this with your accountant or tax planner. ——————— Sarah Lee Marks is MyCarlady. She has over 26+ years of experience. She writes about cars, and is a staunch consumer advocate on car related subjects. MyCarlady offers free car buying advice, and private, auto-related services to help you maintain your personal or commercial vehicles. Call Sarah Lee for more information. Join the MyCarlady newsletter to be kept up-to-date on this and other important car information. —————————————————————————————————————————–   ]]>