Gas Prices Are Up and So Are Deductions:Saving on your Business Auto, Light Truck or Van in 2011

Buying a new vehicle?

Although we are already half way through 2011, you can still take advantage of plenty of write-offs and deductions when it comes to your business autos this year! The IRS has just released the new bonus depreciation dollar caps for business autos bought and put into service in 2011.

Under the Small Business Jobs Act passed in 2010, first- year luxury auto dollar limits increased, providing for larger depreciation deductions. Besides being able to write off more for your business auto, bonus depreciation was also made an option: you can get up to 100% bonus depreciation for the first year, providing that you are buying a NEW vehicle.

Under the new Code Sec. 280F, you can write off up to $8,000 more on your business luxury auto in 2011. The maximum limits for depreciation deduction are the same as those the IRS issued in 2010, but the dollar limits have increased by $100 for the first three years for light trucks and vans. For business luxury-auto owners, bonus depreciation in the first year is still a way to save!

If you’re wondering whether or not you are eligible for bonus depreciation and higher caps on the amount of depreciation you can deduct from your taxes each year, check out this flowchart!

Standard Mileage Rates are Up

Effective July 1, 2011, the IRS has increased the standard mileage rate from 51 cents per mile for business use to 55.5 cents per mile (due to the rapid rise in fuel prices!)

The medical/moving mileage rate has also increased from 19 cents per mile to 23.5 cents per mile, effective July 1, 2011.

Thus, it would be a good idea to take your odometer reading this week! We want to be sure that you get the maximum deduction. If you want us to keep track for you for your 2011 tax return filing, please just shoot Megan (megan@eecpa.com) an email to let her know what your odometer reading is!