The Internal Revenue Service (IRS) has updated Publication 463 (Travel, Entertainment, Gift, and Car Expenses) for use in preparing 2016 tax returns that are filed in 2017. This publication explains what travel, entertainment, and car expenses are deductible, how to report them on returns, what records are needed to prove expenses, and how to treat any expense reimbursements received.
Highlights of Updated Publication
Updated Publication 463 contains the following new information:
Standard mileage rate. For 2016, the standard mileage rate for the cost of operating a taxpayer's car for business use is 54 cents per mile.
Depreciation limits on cars, trucks, and vans. For 2016, the first-year limit on the total depreciation deduction for cars remains at $11,160 ($3,160 if a taxpayer elects not to claim the special depreciation allowance). For trucks and vans, the first-year limit is $11,560 ($3,560 if a taxpayer elects not to claim the special depreciation allowance).
Section 179 deduction. For 2016, the section 179 deduction limit on qualifying property purchases (including cars, trucks, and vans) is a total of $500,000, and the limit on those purchases at which the deduction begins to be phased out is $2,010,000.
Special depreciation allowance. For 2016, the special ("bonus") depreciation allowance on qualified property (including cars, trucks, and vans) remains at 50%.
Click here to access the updated Publication 463.
For more information, including details on company vehicles, visit our section on Fringe Benefits.