Taxpayers should be familiar with the complexities of mileage deductions and car tax deduction.
The Federal Revenue Service (IRS) officially began this year’s tax filing season on January 23, 2023. People in the United States will have until April 18th to file their tax returns for 2022, with those who successfully request extensions having until October 16.
With monies made available by the Inflation Reduction Act, the government has beefed up its ranks by hiring over 5,000 new telephone assistors and support employees to assist tax filers.
What Is Section 179?
Section 179 may be a handy clause to take advantage of for those who run small businesses and have purchased a motor vehicle in the last year for said business.
According to the Internal Tax Code (IRC), Section 179 allows small businesses to take an immediate expenditure deduction for a depreciable asset rather than capitalizing and depreciating the item over time.
Using this definition, the purchase of a vehicle would be considered a depreciating asset.
SUVs, Pickups, and Vans that weigh more than 6000 pounds and are used for business more than 50% of the time can often qualify for at least a partial deduction. Other vehicles that do not have the potential for personal usage, such as hearses, ambulances, freight vans, and box trucks without passenger seating, are also eligible.
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Car Tax Deduction: Do Used Cars Qualify?
Secondhand automobiles are eligible for Section 179 if they are a new addition to the business. According to a TurboTax article, Congress passed legislation to ban taxpayers from supporting expensive vehicles used for corporate purposes.
This means that vehicles purchased new or used for business in 2022 must have a maximum depreciation. The maximum depreciation that can be written off during the first year is worth $11,200, with an additional bonus of up to $8,000.
SUVs with loaded vehicle weights ranging from 6,000 to 14,000 pounds, on the other hand, might have their total expenditures expensed up to 100%.
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