The employee can file Form 1040X and get a refund for the tax he overpaid as a result of treating the reimbursement as taxable under the old definition. Social Security taxes withheld and paid over on reimbursements treated as compensation under the old rules but treated as tax-free under the new rules also can be recovered. 1999 luxury auto depreciation dollar limits and lease income add-backs released. Annual depreciation and expensing deductions for so-called luxury autos are limited to specific dollar amounts. These amounts are inflation-adjusted each year.
Separate rules apply to electric autos.
The dollar limits artificially cap the depreciation deductions normally available for five-year property. So that auto lessees can't avoid the effect of the luxury auto limits, however, taxpayers must include a certain amount in income during each year of the lease to partially offset the lease deduction. The amount varies with the initial fair market value of the leased auto and the year of the lease, and is adjusted for inflation each year. The IRS has released a new inclusion amount table for non-electric autos first leased during 1999. The amounts in the new table are in many instances lower than the figures in the table that applied to autos first leased in 1998.