As we see the year coming to a close, that means it is almost everyone’s favorite time of year: tax season. This can be a very stressful time for individuals, especially small businesses that have to figure out what they can and cannot write off. Within the past few years, the government has issued a new Section 179 tax deduction for buying a business vehicle. This was put into place to help businesses purchase the equipment they needed to complete their business tasks successfully while not losing too much money. Keep reading below to learn more about the Section 179 tax code and see if you qualify and can benefit from it!
What is the Section 179 tax code?
The Section 179 tax code allows businesses to write off the full amount that a vehicle was purchased for. For example, if your company needed a new work van, you would be able to purchase that work van and write off the entire amount you bought it for on your taxes. In years past, businesses have only been able to write off a few thousand dollars a year until the vehicle was completely depreciated. This new tax code is a huge help to businesses because they no longer have to save up for that new work vehicle and try to figure out when it would best fit into their budget. Businesses are now able to purchase the vehicle that is needed to keep the business running smoothly and successfully.
Limits of Section 179
While Section 179 is great in how it can assist businesses, there are a few limits that should be noted. There are caps to how much a business is able to write off in one year. This can vary year to year, so businesses should consult with their accountants for the most up to date amounts.
Who can take advantage of Section 179?
If you are a business owner and you either already purchased a vehicle this year or are planning to purchase a vehicle before the year is over, then you qualify for Section 179. Business vehicles that qualify include the following:
· Vehicles that seat nine passengers behind the driver and front passenger
· A classic cargo van with two seats in the front and room for equipment and supplies in the back
· Heavy construction equipment
· “Over the road” tractor trailers
What is Bonus Depreciation?
If you have two vehicles that you use for multiple businesses, you have now hit the jackpot! Take the following scenario as an example of how the bonus depreciation works. You need two vehicles for your business. You are a plumber, so you need a large cargo van, and you also manage various houses in different cities, so you need a vehicle that gets good gas mileage. If you needed to purchase a new cargo van and a new car in the same year, you would be able to write off both vehicles as an expense on your taxes. You would first write off the cargo van in its entirety, and then you would be able to write off an extra $8,000 on the car that you purchased. You would then continue to write off the car the following years until it is fully depreciated.
It is important to note that you must use the car more than 50% of the time for business ventures and track your mileage so that you can prove you are using your vehicle for business more than 50% of the time. If you do not do so, you will not be able to write off the car on your business taxes. If you do not track your mileage and do not use your vehicle for your business more than 50% of the time, you could end up owning money.
Where can I learn more about the Section 179 Tax Code?
We at Mike Brown Chrysler Dodge Jeep would be more than happy to take your calls, or chat with you in person. We understand that taxes and new tax codes can be quite confusing, so we are here to help you!
Tax codes are always changing, so if you are hoping to take advantage of this code before the year is over, or before the code changes again, make sure that you stop in and see us! We are conveniently located at 4970 East Highway 377 in Granbury. Our friendly staff would be happy to show you our current inventory that would qualify for this tax deduction.
We have a great selection of new and used inventory from cars that get great gas mileage, to trucks, to cargo vans. We are certain that we will be able to find the perfect vehicle for you that will fit the needs of your business. Please fill out the form below or schedule a test drive to get the process started. We look forward to hearing from you and to working with you!