Maybe you’ve had your eye on the latest and greatest photocopier, want to upgrade to the highest end AutoCAD Design Suite software available, or need a new vehicle to get back and forth between the office and work sites. With Section 179 of the tax code, you don’t have to wait.
There is just under two months left before tax season rolls around, and the IRS wants you to take advantage of Section 179 to better your company. Talk to Intivix to find out the best way to leverage Section 179 to keep your operations running smoothly and efficiently – maximizing the benefits of the program.
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 and software to better your business 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 is 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 have 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 organization’s productivity and efficiency. Act on the purchase now to save money on your 2015 taxes. For questions concerning how best to utilize and maximize the benefits of Section 179, contact Intivix and we’ll be happy to help you craft an IT strategy on equipment and software purchasing.