Theresa Arndt, CPA

In June, the IRS announced an increase in the standard mileage rates for the final six months of 2011 .    In their news announcement, the IRS wrote, “This year’s increased gas prices are having a major impact on individual Americans so the IRS is adjusting the standard mileage rates to better reflect them.” For your convenience, here are the mileage rates for 2011: ·          Business: 55.5 cents per mile (Compared to 51 cents for 1 st six months) ·          Medical: 23.5 cents per mile (Compared to 19 cents for 1 st six months) ·          Moving: 23.5 cents per mile (Compared to 19 cents for 1 st six months) ·          Charitable: 14 cents per mile (Unchanged) Taxpayers can use one of two methods to deduct vehicles expenses: standard mileage rate and actual expense method.   Traditionally I have ...

This month the first cars to be fully powered by electricity were released by many of the major auto makers. The new fully electrical vehicles, the Chevy Volt and Nissan Leaf, have no drivetrain and no combustion engine. They are leading the way for the new green revolution in the auto industry. Uncle Sam has promised big tax credits of up to $7,500 for those who purchase any of the new electric models.   This is an attempt to increase consumer interest in green technology.   At the moment consumers are concerned about battery life and whether the infrastructure is in place to support an electric vehicle.   But these big tax breaks may be just enough to make you take a second look. If you are thinking about buying a green vehicle, here is what you need to know.   How much is the credit: This credit is up to $7,500.   A credit is worth more than a deduction; how so?   A deduction reduces your taxable income, so the value depends on your tax brack...

As year-end approaches many of my clients start thinking about next year’s tax bill and what they can do to manage it.   Since the business use of a vehicle can be one of the larger deductions, a new set of wheels is usually the first to come to their mind.   That’s why it doesn’t surprise me when a client calls to ask if he can buy a new $40,000 car for his business and write the whole thing off.     Thanks to some new tax breaks this year, you actually can write off the full cost of purchasing a new luxury SUV – provided it’s used 100% for business and its gross vehicle weight is more than 6,000 pounds.   The vehicles that qualify for the 100% write off are gas guzzlers, but your business may have a need to haul people and materials and can justify the extra fuel costs. For lighter SUVs, passenger cars and light trucks the first-year depreciation is much smaller.   Example 1: Your business buys a new $89,200 BMW X6M and uses it 100% for ...