Archive for the ‘Business Depreciation’ Category

IRS Announces 2009 Standard Mileage Rates

Sunday, January 4th, 2009

IRS Announces 2009 Standard Mileage Rates

CPA Serving Atlanta GA & Beyond
 
IR-2008-131, Nov. 24, 2008WASHINGTON — The Internal Revenue Service today issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 55 cents per mile for business miles driven
  • 24 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
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Section 179 Depreciation…Being Sure you Maximize Your Depreciation Deduction

Wednesday, October 29th, 2008

Section 179 Depreciation…Being Sure you Maximize Your Depreciation Deduction

Depreciation and all of its attendant rules are difficult for both the professional and laymen alike. Sifting through this maze of the tax code is a tenuous task. Perhaps there is no more important section of the tax code to consider when preparing your annual income tax return than the deduction for Section 179 depreciation. Whether you are a S Corporation, LLC, LLP, C Corporation, Partnership or proprietorship this one of the best deductions around and if used and claimed properly can do much to mitigate your current year tax bill. Section 179 depreciation has been around for decades in varying forms and limits. The law is intended to allow business owners to deduct in full, up to prescribed limits, the amount of fixed assets such as furniture, fixtures, computers, and office equipment the year that is purchased. Generally speaking this deduction does not apply to the purchase of fixed assets such a land, buildings, or passenger vehicles. Not only will this deduction help you mitigate your own tax bill but it will also stimulates the economy by encouraging the purchase of capital equipment.

In 2007 the Section 179 limit is $125,000 for most business and individuals and $160,000 if you are in a Qualified Enterprise Zone or for Renewable Community Property. The limit for business was originally set to increase for 2008 to $128,000 (as the amount is indexed annually for inflation), however the maximum amount was increased to $250,000 as a provision of the 2008 Economic Stimulus Act. The maximum limitations apply both at the corporate and personal level meaning that a single business or an individual taxpayer are limited to the maximum amount for that year. Proper tax planning should occur each and every tax year to ensure that all deductions are maximized to the full extent possible while being appropriately cautious about impacts on future year taxes. Section 179 tax elections and amounts claimed are also limited to a ceiling of a business’s profits for the year (i.e. they cannot exceed that years business profits for the maximum IRS set limit for the year). Any unused credits call be rolled forward to future qualifying years. Working with your CPA is the best way to ensure that you always pay only your lowest legally possible tax.

Contact John Dillard CPA of His CPA at 770 814 9304 and visit www.HisCPA.com

At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”

 

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond.

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