I own a landscaping business in which I owe $25,000 in taxes for 2008. I currently drive a 12-year-old truck. If I bought a new one, could I write it off to lessen my 2008 tax burden? I would like to put some of the funds that I’ve set aside to pay my taxes toward the purchase of a truck and then write my truck payments off. Is this possible? Is it a good or bad idea? —Robert Hankosky
Unfortunately a truck purchased in 2009 will not reduce your tax burden for 2008. But if you purchase the vehicle in 2009, you may see some tax savings this year, says Clifford Hersman, an accountant and tax partner at BDO Seidman in Kirkland, Wash. And thanks to the stimulus bill, which extended the first year 50% bonus depreciation into 2009, you’ll save even more, he says.
The 50% bonus depreciation provides a more generous first-year deduction for new cars and light trucks bought and placed into service in 2009. The maximum depreciation deduction has been raised by $8,000, which means your write-off can be as much as $10,960 for autos and $11,160 for light trucks, says Hersman. (Limits previously in place were $2,960 for autos and $3,160 for light trucks). (Note that this deduction increases based on the truck’s gross vehicle weight load, or GVW. If, for example your truck’s GVW is 6,001 pounds to 14,000 pounds, the maximum deduction could be $25,000. For trucks with GVW of more than 14,000 pounds the maximum deduction could be up to $250,000.)
Of course, to qualify for any deductions, the truck you purchase is required to be used more than 50% of the time for business purposes. And for the full deduction, it must be used solely for business purposes.
(For our story on writing off your wheels click here ).
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