Tax Talk

Vehicle deductions for 2012

The IRS has published depreciation limits for business vehicles first placed in service this year.  Because 50% bonus depreciation is allowed only for new vehicles, these limits are different for new and used vehicles.

For new business cars, the first-year limit is $11,160; for used cars, it’s $3,160. After year one, the limits are the same for both new and used cars: $5,100 in year two, $3,050 in year three, and $1,875 in all following years.

The 2012 first-year depreciation limit for trucks and vans is $11,360 for new vehicles and $3,360 for used vehicles. Limits for both new and used vehicles in year two are $5,300, in year three $3,150, and in each succeeding year $1,875.

For details relating to your 2012 business vehicle purchases, contact our office.

Tax freedom on April 17

According to the Tax Foundation, April 17, 2012, was not only the day 2011 tax returns were due, it also was Tax Freedom Day for 2012. That means Americans worked 107 days, from January 1 to April 17, to earn enough money to pay their federal, state, and local taxes for 2012.

If the federal government collected enough taxes to meet 2012 federal spending, Tax Freedom Day would have come 27 days later – on May 14, 2012. And unless Congress acts to prevent tax increases scheduled for 2013, next year’s Tax Freedom Day will be eleven days later than in 2012, and the average American household will pay $3,800 more in taxes.

Contact us at (219) 769-3616 or e-mail your questions to tlynch@swartz-retson.com.

SWARTZ, RETSON & CO., P.C.