Do you need a new or replacement vehicle?

If you are thinking about replacing or buying a business vehicle this year, this article gives you the planning tips you need.

Also, compared with prior years, we are giving you a little more time. For example, to achieve any purchase benefit from a vehicle this year, you need (before midnight on December 31) to both

own the vehicle, and

have placed the vehicle in service for your business.

And, you might ask, are you better off with the deduction this year or next year? Will tax rates go up or down?

Frankly, we don’t know, and we don’t know anyone who really knows. The election will generate much talk and might even provide some insights, but it will not provide certainty.

We do know this for certain: The new Medicare taxes apply in 2013 at the following rates:

3.8 percent on investment income over $200,000 ($250,000 on a joint return), and

0.9 percent on earned income over $200,000 ($250,000 on a joint return).

Thus, if nothing changes and you have investment and/or earned income above the thresholds, you face a tax increase in 2013 and you may want to push deductions to next year.

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