Are You Aware of This 1-2 Tax Strategy? - Philadelphia CPA
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Are You Aware of This 1-2 Tax Strategy?

Are You Aware of This 1-2 Tax Strategy?

You can be rewarded with huge tax savings with heavy vehicle and home-office deduction combo.

The heave vehicle produces quick deductions. A home office that qualifies as a principal office eliminates commuting miles, thus enhancing the business-use percentage of the vehicle(s).

Here’s a potential scenario. You purchase a $50,000 vehicle than you use 60% for business–hence, the depreciation and expensing elections apply to $30,000. Now, if you operate a tax code- defined principal office in your home, you base is potentially increased to 90%–that’s a $15,000 increase!!—and you did not spend any additional money or drive a mile farther to capture it.

The heavy vehicle strategy requires a gross vehicle weight rating (GVWR) of more than 6,000 pounds. If tax law classifies the heavy vehicle as an SUV, your Section 179 expense deduction is limited to $25,000–otherwise the limit is $510,000. This applies to new and used SUV’s!

If the SUV is new, you qualify for the additional 50 percent bonus depreciation as well. This could amount to a generous $40,000 first-year write-off!

It should be noted that this one-two strategy of heavy/home office applies to your business regardless of the type of entity.