Section 179 Tax Deductions :: What Qualifies?
There’s one thing every business owner has in common – reducing their overall tax burden. The Section 179 tax break allows business owners to deduct certain technology expenses, in turn, offsetting the cost of the purchase. Now, that’s something every business owner can get on board with.
What is a Section 179 deduction?
Instead of depreciating an asset over a number of years, you might be able to deduct the entire cost during the first year. It’s like instant gratification when it comes to deducting the cost of new equipment like a computer, software, business vehicle, or office furniture.
When should you act?
With only a little over a month left in 2018, it’s time to start thinking about the Section 179 tax break now, and how it can be applied to your year-end business purchases. This is a great opportunity to maximize your purchasing power by taking a large tax deduction on qualifying equipment and software.
The limit for 2018 increased to $1,000,000. The bonus depreciation is 100% and was made retroactive to 9/27/2017 and extends through 2022.
How does it work?
The Section 179 tax code allows business owners to deduct the full purchase price (up to $1,000,000) of purchased or leased equipment from your gross income instead of requiring the cost to be depreciated. Once the equipment is purchased, you will complete a special IRS form and attach it to your 2018 tax return and you’re all set!
What qualifies for the deduction?
Almost all types of physical equipment or software that is purchased for business use and put into production between January 1, 2018 and December 31, 2018. If you use it for your business, it most likely qualifies. Some of the qualifying purchases are:
- Off-the-Shelf” Software*
- Business Vehicles
- Equipment (machines) for business use
- Office Furniture
*Off-the-Shelf is any software that is not custom designed, available for the general public, and is used in your business as an income producing activity.
Use it or lose it!
If you plan on purchasing business equipment including computer hardware or software, it’s in your favor to make those purchases prior to the end of the year so they will be in place by midnight on December 31, 2018. Use this handy calculator to see how much you could save and check out all of the equipment and software that qualifies.
What should you do now?
- Schedule time to talk with your financial advisor or accountant to determine how your business can best utilize this tax break
- Contact your sales rep or our sales department and we can begin planning these purchases. But don’t wait, qualifying purchases must be ordered and put into service by December 31, 2018.
Deductions are an important component for all small businesses, making this the perfect time to invest in those items you’ve been eyeing.
Questions? Contact our sales department and we’ll help you navigate through the process.
IT Resource is a premier provider of email security, voice and messaging solutions, file backup, cloud computing, and network security. Headquartered in Grand Rapids, we serve customers in Muskegon, Holland, Fort Wayne, Lafayette, Lansing, Chicago, and Kalamazoo. Let’s talk about how we can help your business make the most of its technology.