2008
TAX CHANGES
By Sandy Botkin, CPA
New Deductions Could Mean More Cuts
This has been a big year for tax goodies. From cars and trucks to copiers and computers, increases in allowable
deductions for 2008 could mean a smaller tax bill next year. Three rule changes you need to know about are:
1. Mileage Increase
Example: Patrick buys a Cadillac Escalade in July for
The standard mileage credit IRS gave in 2007 was 50.5
$60,000, using it 90% for business. Thus, the business
cents for business and 19 cents for medical or quali-
use of his SUV would be 90% of $60,000 = $54,000.
fied moving trips. However, due to sudden gas price
This year, he can deduct approximately $43,200 of the
increases – and not-so-gentle congressional prompting
cost. If you want to take a sizable bit out of your taxes,
– these expenses have gone up effective July 1 of this
this will do it!
year. That is the tricky part. Thus, the reimbursement
3. Increased Expense Allowance
stays as is from January 1 to June 30. However, from
In previous years, you were able to deduct up to
July 1 on, you can claim 58.5 cents for each business
$125,000 of equipment that you buy for your busi-
mile driven and 27 cents for medical and moving pur-
ness by making an election on your tax return. This
poses. That could add up to some big change for those
number has been doubled for equipment purchases in
who drive a lot.
2008 to $250,000.
2. Bonus SUV Depreciation
Requirements: To make this election, you need to
If you buy a qualified SUV – new or used – you can
meet certain rules. First, you must use the equipment
elect to write off up to $25,000 of the business use of
more than 50% for business. Second, the election
that vehicle. A qualified SUV is one that has a truck
can’t create a loss, although any excess can be carried
chassis, carries passengers and has a gross vehicle
forward to future years. Finally, the equipment must
loaded weight of over 6,000 pounds.
be new to you. It doesn’t have to be new, it just has to
Starting in 2008, if you buy a new qualified SUV, you
be new to you!
not only get the above-noted standard depreciation,
These are general tips based on IRS advisories. Check
you can also claim 50% bonus depreciation.
with your accountant about how these changes could
What this means to you is that if you buy a qualified
impact your tax bill.
SUV, you can write off as much as 80% of the business
Author: Sandy Botkin is a CPA, tax attorney and presi-
use of that vehicle in the first year!
dent of the Tax Reduction Institute. He has two home
Note that his bonus depreciation only applies to qualified
study courses which are offered members at a dis-
SUVs placed in service this year! In addition, it doesn’t
count. “Tax Strategies for Business Professionals” and
matter when you buy the car. The depreciation and
“Wealth Building Tax Secrets of the Rich.” He also has
$25,000 election applies to the business use of the vehicle.
two published books, “Lower Your Taxes: BIG TIME”
68
www.coloradohomeownermag.com and “Real Estate Tax Secrets.”
www.coloradohomeownermag.com
71
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