16 Oct 2019 Tax Deduction | Section 179
Save money with Section 179
Today we’re reviewing tax codes – wait don’t go! While some tax topics can be complicated, there’s one that is pretty straight-forward and it can generate BIG savings for your business.
The tax code in question? It’s Section 179. The beauty of this deduction is that it allows your business to write off the whole purchase price on qualifying equipment in the current tax year. In the simplest terms, you could write off up to $1,000,000 on your 2019 tax return. It helps to lower your taxable income, meaning that you can keep more of what you earned in 2019 rather than paying it in taxes. Still not convinced? Keep reading and bring up Section 179 to your tax preparer.
There are a variety of small and medium businesses this deduction applies to. If your businesses has purchased, financed, and/or leased new or used business equipment during tax year 2019, you should qualify for the Section 179 Deduction. There is a cap for how much you can spend on equipment to qualify, but we will get back to that in a minute.
Section 179 applies to equipment, tools, hardware and out-of-the-box software for your business. These items can be new, or new-to-you, as long as they were purchased and put into use within 2019.
$1,000,000 can be written off for new and used equipment. It also applies to off-the-shelf software. The limit to the total amount of equipment purchased is $2,500,000.
After $2,500,000, the deduction begins to phase out on a dollar-for-dollar basis. If your company spent more than $3,500,000 on equipment this tax year, we’re sorry to say this deduction does not apply to you.
Business Use Rule
One more caveat about the equipment; the applicable equipment must be used for business purposes more than 50% of the time to qualify for the deduction.
To qualify for your 2019 tax return, your equipment must be financed or purchased and put into service between January 1st, 2019 and December 31st, 2019.
Big businesses, this one’s for you! Bonus Depreciation can be taken after the Section 179 spending cap is reached. Some years it is offered, some years it isn’t. This year, not only is it offered at 100%, but you can also use the bonus depreciation on new and/or new-to-you (used) equipment. In previous years it was limited to new equipment.
Don’t forget about the Tariffs!
Tariffs impacting Mobile Computers with cellular connectivity were delayed, but that December 16th deadline will be here quickly. You’ll get the biggest bang for your buck by purchasing before December 16th and applying Section 179 to all of your 2019 purchases.
Be prepared for 2020
When it comes to your supply chain needs, we have the equipment, software and service to help you automate more, access more, achieve more. Use Section 179 to get ahead for next year! The scanners, printers, etc. you’ve been considering come with quite the incentive. Up to 1,000,000 incentives if you ask us. Don’t wait until 2020. Reach out today and we will help you make the most of your deduction*.
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*We’re barcode and RFID experts, not tax specialists. This article is meant to introduce you to Section 179. For tax guidance or questions, please consult a tax professional. For your supply chain products, services and supplies, you’ve come to the right place!