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Put business car deductions in gear

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I plan to buy a car for business driving late this year. Should I use the standard mileage rate? H.K., Galveston, Texas

A. Probably not. It’s likely you’ll do better taxwise by deducting your actual expenses. If you keep proper records, you can write off the proportionate cost of your out-of-pocket expenses, a sizable first-year depreciation deduction and 50% bonus depreciation. The total will undoubtedly reach well into thousands of tax dollars. In contrast, the standard mileage rate for 2012 is only 55.5 cents per business mile (plus tolls and parking fees). Compare the results.

Tip: The maximum first-year depreciation deduction for a new vehicle placed in service in 2012, including bonus depreciation, is $11,160 (based on 100% business use).

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