You have had your eye on a flashy little number that will make your life much easier. It prints, it faxes, it emails, and it scans. You can’t stop thinking about how efficient the office would be if you could just get it off the shelf and take it to the office. Well, you can. You have fewer than two months before tax season rolls around, and the IRS wants you to have that new all-in-one. In fact, now is a good time to purchase any new equipment or software for your network before the end of the season rolls around. Talk to your accountant or tax professional about how you can take advantage of Section 179 on your taxes.
What is Section 179?
Section 179 is a tax deduction that helps you buy new equipment and software for your company. Section 179 is the tax code that permits small and medium-sized businesses to purchase qualifying equipment software to better the businesses within the 2015 tax year. Businesses can deduct the full amount of the equipment or software purchase or lease from the company’s gross income. Yes, the IRS allows you to deduct the entire purchase or lease price of qualifying equipment and certain software at tax time.
The code is designed specifically to help small and medium-sized businesses, as the deduction starts to fall off nearly dollar-for-dollar after the allotted maximum is reached. The Section 179 limit is $25,000. If you are not sure just how much the deduction has already saved you, allow us to show you. Let’s say your total equipment purchase is $2500 this year. After the Section 179 deduction, assuming no depreciation in the first year and a 35% tax bracket, the total cash savings on the equipment is $875. After the tax savings, the lower cost of the equipment would be $1625.00 That sounds much better than $2500.
Nearly all equipment a company buys qualifies as “business equipment,” and if it used more than 50% of the time for business activities, it may qualify for Section 179. The IRS lists the following as potentially eligible purchases.
- Equipment, tools or property attached to the building. Note: this cannot be structure betterment costs, add-ons, or any other structural add-ons. The equipment must not be a structural component.
- Tangible property
- Office furniture and equipment
- Certain business vehicles
- Computers, computer equipment and off-the-shelf software
- Equipment used for business more than 50% of the time. Note: if you use computer equipment less than 100% of the time, the deduction will be based on the percentage of time the equipment is used for business use.
Don’t wait any longer to improve your business’s productivity and efficiency. Act on the purchase now to save money on your 2015 taxes.