Yesterday I told you about actual auto expenses vs the IRS mileage rate as a business deduction. Just remember, using either method still requires you to have an auto mileage log to prove your business miles. So make sure you keep a mileage log, or the IRS can change or disallow your business miles and reduce or eliminate your deduction for auto expense. Email me at bstonercpa@sbcglobal. to ask me about this log and what you need to substantiate your business miles.
Brian’s Tax Musings
If you take the IRS mileage rate of 51 cents per mile for Jan – June and 55.5 cents per mile for July – December, you may be losing some deductions. Especially if this is on a new car, you need to run a calculation to determine if the actual expenses will give you a larger deduction vs the mileage rate. Take your expenses, add depreciation, then take the percentage of business use as a percentage and multiply. Take the higher of the two. One thing to remember if you take accelerated depreciation you are not allowed to take the mileage rate anymore, so if the deductions are close, you may want to take the mileage to allow you to take the mileage rate in the future.If you have questions, you can email me at bstonercpa@sbcglobal.net
Brian’s Tax Musings
Friday we discussed the Estate and Gift tax exclusions. Right now both lifetime exclusions are at $5,000,000 until the end of 2012. What happens if you gift the $5,000,000 out of your estate and Congress lets the gift exclusion go back to $1,000,000 in 2013? Well that is the $4,000,000 question. The gift tax exclusion has never gone down from one year to the next, so there is no telling what will happen. Perhaps the $5,000,000 will be grandfathered in (probably) or maybe there will be retroactive gift tax (I doubt it). This is one of the questions that people will be asking in the last few months of 2012, won’t they?