Fleet vehicle tax benefits for business owners in Salisbury, MD
Buying new fleet vehicle involves a lot of contemplation of which the most important is how much tax benefit can I get? Section 179 of the Tax Code talks about fleet vehicle tax benefits for buying vehicles under your business name. While coupes, sedans, small trucks, and small SUVs can deduct up to $18,100 per vehicle, larger trucks, SUVs, and vans can deduct up to 100% of the purchase price or $25,000 max. Here we are going to answer all your questions on fleet vehicle tax benefits for business owners in Salisbury, MD.
There are 2 ways you can get these deductions:
Mileage based deduction: You can claim $0.575 for each mile driven for business purpose, which is a significant amount. If your vehicle is fuel-efficient and in good condition, you’ll save more with the mileage-based deduction. On the flip side, if you choose mileage-based deduction, you cannot claim the depreciation or expense-based deductions.
Expense based deduction: Although this system is lengthier than mileage-based model as it requires you to collect all receipts and add them up while filing taxes, but you can claim far more extra on this model. It covers gas payments, insurance, lease, tire, car wash, parking and tolls, maintenance, and more.
Things to note
1. When you buy your vehicle through your business, it becomes a business vehicle and gets you tax deductions under business operation cost. In this case you must note and only business trips can be deducted. If you use the business vehicle for personal use, it will not be deducted.
2. If you have employees that need to drive or require transport from office, you can get tax benefit for it. Employee expenses are generously deducted in taxes. But you can only benefit from these deductions only after you reimburse your employees when they incur expenses, not before it.
3. Your daily commuting mileage and expenses aren’t deductible. So, you’ll need to subtract the miles you accrue commuting from the total mileage of the vehicle.
4. Your personal FICO credit score is also assessed along with your business, to get a business auto loan.
Purchasing a vehicle through your business can save you plenty in taxes and deductions for expenses only if you use it for qualifying purposes. Drop by at our showroom Pohanka Mercedes-Benz of Salisbury to know your exact savings or for a test drive.