Source: https://www.velieconsultingservices.com/income-tax-info/archives/11-2018
Timestamp: 2020-08-12 20:20:40
Document Index: 699912981

Matched Legal Cases: ['§179', '§ 179', '§179', '§179', '§179', '§ 179']

Written by TaxConnections Admin
The Tax Cuts and Jobs Act (TCJA) made changes that impact the depreciation and expensing of vehicles.
2018 Depreciation Limitations On Luxury Automobiles And Personal Use Property
For passenger automobiles placed into service after December 31, 2017, SECTION 13202 of the Tax Cuts And Jobs Act increases the dollar limitations on depreciation and expensing for passenger automobiles. For 2018, the amount of the depreciation and expensing deduction for a passenger car, light duty truck or van shall not exceed--
$10,000 for the 1st taxable year in the recovery period,
$16,000 for the 2nd taxable year in the recovery period,
$9,600 for the 3rd taxable year in the recovery period, and
$5,760 for each succeeding taxable year in the recovery period.
These numbers shall be adjusted for inflation after 2018. As such, for 2018, the limits for light-duty trucks, vans, and passenger cars are the same.
The TCJA retained the $8,000 limit for additional first-year depreciation for passenger automobiles. So in 2018, the maximum amount a taxpayer can deduct for a passenger automobile in the first year is $18,000.
The TCJA increased bonus depreciation to 100 percent for qualifying property acquired and placed into service after September 27, 2017, and before January 1, 2023. It also extended bonus depreciation to used property acquired and placed into service after September 27, 2017.
SUVs with a gross vehicle weight rating above 6,000 lbs. are not subject to depreciation limits. They are, however, limited to a $25,000 IRC §179 deduction. IRC § 179(b)(5)(A). No depreciation or §179 limits apply to SUVs with a GVW more than 14,000 lbs. Trucks and vans with a GVW rating above 6,000 lbs. but not more than 14,000 lbs. generally have the same limits: no depreciation limitation, but a $25,000 IRC §179 deduction. These vehicles, however, are not subject to the §179 $25,000 limit if any of the following exceptions apply:
-The vehicle is designed to have a seating capacity of more than nine persons behind the driver’s seat;
-The vehicle is equipped with a cargo area at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment; or
-The vehicle has an integral enclosure, fully enclosing the driver compartment and load-carrying device, does not have seating behind the driver’s seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
Although SUVs purchased after September 27, 2017, remain subject to the $25,000 IRC § 179 limit, they are eligible for 100% bonus depreciation if they are above 6,000 lbs. This is true for both new and used vehicles. For a taxpayer’s first taxable year ending after Sept. 27, 2017, taxpayers may elect to apply a 50 percent allowance instead of the 100 percent allowance. To make the election, they must attach a statement to a timely filed return (including extensions) indicating they are electing to claim a 50% special depreciation allowance for all qualified property. Once made, the election cannot be revoked without IRS consent. As noted above, taxpayers may also elect out of bonus entirely for any class of property by filing an election on a timely filed return. Once filed, that election can also not be revoked without IRS consent.
If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.
Standard Mileage Rate – The Internal Revenue Service issued the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
You can’t be a rural mail carrier who received a “qualified reimbursement.”
For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if
you choose the standard mileage rate.
Actual Expenses – To use the actual expense method, you must determine what it actually costs to operate the car for the portion of the overall use of the car that’s business use. Include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are business miles.
Generally, the Modified Accelerated Cost Recovery System (MACRS) is the only depreciation method that can be used by car owners to depreciate any car placed in service after 1986. However, if you used the standard mileage rate in the year you place the car in service and change to the actual expense method in a later year and before your car is fully depreciated, you must use straight-line depreciation over the estimated remaining useful life of the car.
The law requires that you substantiate your expenses by adequate records or by sufficient evidence to support your own statement.
A Recap of some of the major tax provisions for 2018 in the new tax bill and how they may impact you.
​Lower Tax Rates and Changed Income Ranges
The bill retains the seven tax brackets found in current law but lowers a number of the tax rates. It also changes the income thresholds at which the rates apply.
​For single filers:
So for 2017 and 2018, you can deduct medical expenses that are more than 7.5% of your adjusted gross income as opposed to the higher 10%.