Lynn Spencer here again with Killingsworth Spencer CPAs and another important tax tip. The 100% bonus depreciation deduction goes away on December 31, 2022. Business owner’s looking to buy a large new vehicle, for example, have likely heard there is a big tax write-off for purchasing a vehicle over 6000 pounds. Buying a large vehicle in 2022 will “fuel” a large tax deduction, but there are some caveats. The vehicle must be used for more than 50% business. This is a one-time huge deduction, but with cautions in future years. Once this method is used, the business owner cannot use mileage driven to write off; he can only write-off future maintenance, repairs, gas, and insurance. Plus, the vehicle must be kept in service for a full 5 years. If sold prior to, part of the depreciation write-off must be recaptured and added to income. This accelerated depreciation method may not always be the best method to deduct auto expenses and falls into the category of “it depends”. Speaking of businesses and cars, who can drive all their customers away and still make money? — Taxi drivers. Killingsworth Spencer CPAs will be happy to run some financial scenarios to determine if this tax saving strategy will be a great fit for you and your company.
