Everything You Were Afraid to Ask About Section 179
Taxes can overwhelm the best of us – but if you’re the owner of a small or medium-sized business, Section 179 is well worth the extra effort this tax season. If you’ve put off looking into this bottom-line-boosting provision, let us break it down:
What is the Section 179 tax deduction?
Instead of gradually depreciating technology over several years, Section 179 allows you to deduct the full price of any qualifying equipment or software purchased or leased during the year. It’s meant to encourage businesses to stay competitive by purchasing the equipment they need while benefiting their bottom line. Depreciating assets in the first year also helps reduce overall profit, which is the figure that ultimately determines your tax payment.
Will it benefit me?
No matter your industry or the size of your business, you rely heavily on technology to service your customers, make your job easier and capture your share of the market. Section 179 allows you to upgrade to the newest technologies without the blow of a huge upfront cost. Even businesses with a net loss are qualified to deduct some of the cost of new equipment and carry forward the loss.
- Purchased, financed or leased business equipment
- Computers and “off-the-shelf” software (productive, anti-virus, administrative, etc.)
- Office equipment and machinery (e.g. servers and printers, routers, network switches, network security appliances)
- Commercial use vehicles
- Improvements to nonresidential property
What do I need to do?
- Purchase, finance or lease equipment and put it into use by midnight on Dec. 31, 2018
- Use it for business purposes more than 50% of the time
- Consult with your accountant to determine your eligibility
What are my limits?
- $1M – Maximum total amount you can write off in 2018
- $2.5M – Maximum total amount of equipment purchased in 2018 eligible for full deduction
How can I take advantage of the Section 179 deduction?
- Simply make the purchase and use Form 4562 to claim your deduction
- The full deduction can be claimed until you’ve reached $2.5M in equipment or software purchases
- Past the $2.5M point, the deduction decreases on a dollar for dollar basis and disappears once $3.5M worth of equipment is purchased
Stop making excuses not to invest in yourself and get a powerful edge over your competition by taking advantage of Section 179. Not sure where to start? Contact us today to talk about upgrading your technology infrastructure.