Writing off motor vehicle expenses as a business deduction can be a significant tax perk for business owners. But be advised: If you deduct actual expenses for the business use of a car, your write-offs might be limited due to luxury car limitations.
Unfortunately, what you consider a luxury vehicle and what the IRS considers a luxury vehicle are likely two different things. In the eyes of tax officials, even trucks and SUVs can be defined as luxury cars, regardless of their sticker price. As long as a four-wheeled vehicle is driven primarily on public roads and does not exceed 6,000 pounds when unloaded, it qualifies as a luxury car.
Another important point to keep in mind is that the government limits what you can expense on SUVs weighing 14,000 pounds or less and certain other vehicles. In an effort to narrow the Section 179 deduction and curb the practice of buying SUVs as tax shelters, you are restricted from writing off more than $25,000 of the cost of such vehicles used for business purposes during a given tax year.
As is typical with tax law, however, there are exceptions to these rules on depreciation limits and the specifics can change with each new tax season. That’s why it’s essential to consult the experienced professionals at Taxation Solutions, Inc. when you want to make the best tax decisions for your individual situation. Let us help you stay up to date on the rules and make the most of your business tax deductions. Contact us in the St. Louis area today!