All small businesses have to claim deductions yearly. There is an amazing way to go about claiming said deductions and it is called Section 179. Section 179 recently became a permanent part of the Protecting Americans from Tax Hikes Act, allowing businesses to invest in their own business and deduct all of their equipment purchases.
What exactly is Section 179?
Section 179 allows small businesses to invest in new equipment that will help them succeed, and allow them to use it on their taxes as a deduction each year. This means a company can purchase a new copier or business software either out right or financed throughout the current tax year and deduct these spending from their gross income. Larger businesses can use Section 179 only if their financed or regular purchases are less than $2,000,000.
Now that Section 179 is permanent, business owners no longer have to wait for Congress to renew this tax benefit year and year.
How does Section 179 work?
Unfortunately, the deduction limit is currently $500,000 on new or used equipment, and the spending cap is at $2,000,000. All new or used equipment must be purchased by December 31 of each year to qualify for the Section 179 deduction.
To claim this deduction, you will need to download the IRS form 4562 and fill it out accordingly. Note the Section 179 claim is taken on an item-by-item basis. And not all equipment will qualify for this deduction.
The following equipment is eligible for the Section 179 deductions:
* Copiers, Printers and Off- the-shelf computer software (must be available to purchase by the general public and not heavily modified)
* Tangible personal property
* Other tangible property used for important processes or related facilities
* Single purpose livestock or horticultural structures
* Storage facilities that are used with petroleum distribution
* Qualified real property
* Tangible personal property encompasses machinery and equipment, storage tanks and livestock (horses)
* Vehicles- you will need to fill out Form 2106 to find the qualifications
Always talk with your accountant or financial advisor so you can take full advantage of Section 179 and all of its benefits. Then, contact Tri-Copy today so we can help equip your business with the best and most Tax Smart Technology Solution.
