By FCA US LLC
Purchasing a new vehicle for business could save you money at tax time.
Section 179 of the U.S. tax code presents a welcome opportunity for small-business owners to save money at tax time. An economic incentive designed to encourage the purchase of business-related equipment, thereby spurring growth in the economy, Section 179 lets taxpayers deduct the full cost (within limits) of certain types of property from their federal taxes for the year the property was purchased and put into service.
Previously in a state of flux from tax year to tax year, the U.S. House and Senate last December approved a bill to permanently raise the Section 179 deduction limit to $500,000 on qualifying equipment. “Qualifying equipment” is this case is defined by the IRS as machinery, computers, office furniture, software and so on. Visit the IRS website to see the list of purchases that qualify.
While many people can and do apply the Section 179 deduction to vehicles purchased for business reasons, small-business owners should keep in mind that there may be restrictions in place for this type of purchase.
To put it simply (or as simply as possible), whereas vehicles unlikely to be used for personal use – vehicles with a fully-enclosed driver’s compartment/cargo area, for example – qualify for the full $500,000 deduction, passenger vehicles are subject to certain deduction limits, even if they’re used for work more than 50% of the time. Similarly, SUVs, trucks and vans that do not meet specific IRS guidelines are also subject to limitations.
If you purchased or plan to purchase a new work vehicle in 2016 using the $500 cash allowance from FCA US LLC, eligible to all members of National Association of Remodeling Industry, you may benefit from Section 179, regardless of deduction limits. Consult this worksheet to see the estimated Section 179 expense allowances for Chrysler, Dodge, Jeep®, Ram and FIAT® brand vehicles.
Don’t forget NARI members along with their household family members and employees are eligible for a $500 cash allowance on select Chrysler, Dodge, Jeep, Ram and FIAT Brand vehicles. Visit www.nari.org/fca or stop by an FCA US LLC dealership today for more details.