Posts filed under Personal Finance

Can I Write Off My New Car?

This time of year, we get a lot of questions about tax deductions for vehicle purchases. Can I write off my new car? The full amount? Does it make sense to purchase a vehicle now before the end of the year? 

Like any areas of tax law, vehicle write offs can unfortunately be a little complex. Here, we'll provide a quick run through to explain when new vehicles qualify for deductions and how much you can expect to expense. 

When I can deduct my new vehicle as a business expense?

You can deduct your vehicle (or part of your vehicle) as a business expense if it’s used mostly for your business. Seems pretty simple, but exactly how much you can write off varies depending on the type of vehicle and its use. So let’s dig a little deeper.

How much I can deduct?

If you purchase a business vehicle that by its nature is not suited for personal travel (ambulance, hearse, cargo vehicles without seats, taxis, vehicles with seats for over nine passengers), you can generally write off the whole thing. This doesn’t mean you can purchase a hearse, claim the full expense, and then use it as your personal vehicle. Personal use will still trump the kind of vehicle you purchase.

If you have a passenger vehicle (car, truck, van) and use it for business purposes more than 50% of the time, you’re able to claim a portion of your expenses the year it was purchased and made available for use.

  • Cars - up to $3,160 for regular depreciation
  • Trucks and vans - up to $3,460 for regular depreciation

Under Section 179 of the tax law, there’s a specific depreciation break for certain passenger vehicles with a gross weight between 6,000 and 14,000 lbs. If these vehicles are financed and meet proper conditions, you can qualify for expensing up to $25,000 the first year. Regular depreciation can also be taken depending on the cost of the vehicle. 

Here’s a list of vehicles that qualify under Section 179, although this list is not exhaustive:

  • Audi: Q7 TDI
  • BMW: X5, X6
  • Buick: Enclave
  • Cadillac: Escalade
  • Chevy: Silverado, Suburban, Tahoe, and Traverse
  • Dodge: Durango and Ram pickup
  • Ford: Expedition, Explorer, all F-Series pickups, Transit vans
  • GMC: Acadia, Yukon, all Sierra pickups 
  • Infiniti: QX56
  • Jeep: Grand Cherokee
  • Land Rover: LR4, HSE, Sport
  • Lincoln: MKT, Navigator
  • Mercedes: GL 350 diesel, ML350, R350
  • Nissan: Armada NV, Pathfinder 4-wheel drive, Titan
  • VW: Touareg hybrid

In past years, there’s been an opportunity for additional deductions through bonus depreciation. Bonus depreciation for 2015 is not yet available, but this could change before the end of the year.

Here’s a look at last year’s numbers, which included bonus depreciation:

  • Cars - additional $8,000 bonus depreciation (for a max of $11,160 in deductions) 
  • Trucks and vans not qualifying for section 179 - additional $8,000 bonus depreciation (for a max of $11,460 in deductions) 
  • Vehicles qualifying for Section 179 - additional bonus deprecation for up to half of the remaining cost of the car (up to $8,000), plus regular depreciation

    For example: The first year depreciation for a Nissan Armada costing $40,000 could be like this:
    • $25,000 per Section 179
    • Plus bonus deprecation of half of the remaining amount, not to exceed $8,000. 
      • $40,000 less $25,000 = $15,000 remaining
      • Half of $15,000 = $7,500 bonus depreciation
      • $25,000 plus $7,500 = $32,500 total
    • Plus $1,500 for regular depreciation. 
      • Totaling $34,000

(Please remember that as of this writing bonus deprecation is not available for 2015.) 

If your vehicle is used for business 100% of the time, you can likely claim maximum deduction figures. But if only 75% of its use is for business, your deduction will decrease by the appropriate percentage. 

For example, if you purchased a new car in 2014 and used it for business 75% of the time, you were were able to take $2,370 in standard deductions regular deprecation (3,160 x 75%) and $6,000 in bonus depreciation ($8,000 x 75%) for a total of $8,370 in deductions. 

These were the basic figures for first-year depreciation on new vehicles in 2014, and, again, the decision on 2015 bonus depreciation will be made within the coming months. 

If you have specific questions, talk to a qualified tax professional. There might be nuances to your finances that affect the numbers we’ve crunched here. Our team is available to listen to your questions and help explain your tax situation so it’s easier to understand.

Posted on November 9, 2015 and filed under Tax Preparation, Personal Finance.

Seniors, Fraud and Protecting your Golden Years

Ah the golden years. If you are like most folks you are looking forward to a host of pleasures associated with being a senior. These might include lots of travel, time with the grandkids, giving back in some way and living a carefree life. It’s an exciting vision that unfortunately most seniors don’t ever get the chance to realize. So many things can derail your plans and keep you from achieving your goals in your golden years.

Crimes against seniors are on the rise 

Senior fraud is on the rise and can literally destroy your life. Many good people have been robbed of their hard earned life savings in the blink of an eye. According to Minnesota’s Attorney General Lori Swanson telemarketing fraud alone is a $40 billion a year business. The good news is that many government agencies have stepped up their efforts to keep ahead of this growing trend. 

Seek out resources for assistance

The National Council on Aging has designated a significant portion of their website to economic security for seniors. They recently posted a great article: Top 8 Ways to Protect Yourself from Scams. This article and the entire website are solid resources for both seniors and their families. The 8 tips are a common sense approach to being sure that you and your loved ones are aware of simple things you can do to protect your golden years and your financial assets. 

Be a skeptic 

My personal favorite in the Top 8 article is #8 – Be skeptical of all unsolicited offers and thoroughly do your research. An informed senior rarely becomes a victim of fraud or senior crime. Another comprehensive resource is this Senior Fraud Protection Kit available through

The internet is a helpful tool to research things like investment opportunities, organizations looking for donations or home care and nursing home options. The challenge is sifting through the volumes of information that a search produces and determining what is valid.

Ask for help 

Nothing can replace the sense of security you have knowing you can pick up the phone and call a trusted adviser. And remember, any request for your money or personal information can wait until you do your research and call your team. . 

Additional resources:

Posted on January 29, 2014 and filed under Personal Finance.

Annual Gifts Can Reduce Your Tax Liabilities

Federal and state taxes may apply to gifts from your estate. Giving gifts is one way to offset or reduce annual income tax liabilities and reduce the size of your estate that may be subject to taxation upon death.

The Fed and 2 States Claim Taxes for Estates and Gifts

Currently two states, Minnesota and Connecticut have state level assessments for gift tax in addition to federal tax rates. For lifetime gifts of $1,000,000 or more a rate of 10% is assessed.  There is also an estate tax at death for $1,000,000+ estates of 16-41%.  The federal gift and estate tax exemption is currently set at $5.25 million.  So even if your estate is exempt from federal taxes your estate may be subject to state taxes. Minnesota has calculator available on the Department of Revenue website. 

Plan and Reduce Your Liabilities

One way to reduce your annual tax burden is give annual gifts.  The current level of tax exclusion is $14,000 per person, per year.  A married couple could give $28,000 per person, per year.

You may not owe taxes for assets left to spouses and it's possible that expense reductions could bring your estate under the limits established. It is always prudent to get advice specific to your situation and holdings. 

Interested in reading about actual cases and their tax outcomes?  Tax Adviser has an interesting blog on a couple of cases that are eye opening.

There was also the well publicized case of the actor, James Gandolfini's death this summer and the possible mismanagement of his estate tax planning.  Here is a link if you missed the story. 
Take action and get your affairs in order - it could save you and your heirs lots of money and difficulties down the road. Bulger CPA has a passion for the Estates and Trust area - let's have a discussion to protect your hard earnings.

Posted on January 14, 2014 and filed under Estates & Trusts, Personal Finance.