As the end of the year approaches, there are some beneficial tax incentives that are available to businesses. Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment either purchased or leased during the tax year. Originally designed to help small businesses purchase equipment as an incentive, more importantly, for the businesses to invest in themselves.
All businesses need equipment, be it machinery, computers, telephone systems, software, office furnishings, Security Camera’s and more. It is likely that your business will purchase many qualifying goods during the year. Section 179 is designed to make that purchasing decision financially attractive.
2015 deduction limit is $25,000, and the spending cap is $200,000. This deduction is available for equipment and software purchased and placed into service by Dec. 31 of each tax year. For example, if a company purchases new equipment for a total of $8,000. The entire amount is deductible, and the lowered cost of the equipment less the tax savings is $5,200. The cash savings on this amount is $2,800, based upon an assumption of a 35 percent tax bracket.
This adds up to real money for small businesses, especially if they use this at the end of the year. If tax year 2015 was a profitable year for the business, the 179 deduction is one of the best planning tools available. If you buy qualifying equipment before year end, and also placed into service by December 31, 2015, up to $25,000 can be deducted on a dollar per dollar basis. Section 179 deduction is simple to use. Businesses fill out part 1 of IRS form 4562. Nothing more.
By deducting the full cost, you lower the amount you pay for that equipment fairly substantially. If you choose to lease or finance your equipment, the benefits can be further expanded. This means that if you only paid a deposit and made a payment or two toward a lease, 100 percent of the purchase will be deductible, even though out of pocket expenses do not equate to the $25,000 limit. There is simply no better time than now to take advantage of Section 179, because it is a use it or lose it write off, that will end Dec. 31.
Bonus depreciation is not available for tax year 2015 as in years past. There is no guarantee that congress will continue the Section 179 deduction beyond 2015, since previous years had a much higher deduction limits. There are efforts to get congress to raise the deduction back to the higher limits, but at this time, the current $25,000 appears to be the limit for 2015.
nQuery Telecom is not a tax or financial institution so please contact your tax professional to find out if the 179 deduction would benefit your business. Chances are the answer is yes. The bottom line for businesses, is to take advantage of the Section 179 deduction now, and to purchase the qualifying goods they need to grow, before this opportunity could be lost forever.
Work with the experts at nQuery Telecom for a quick quote and analysis to take advantage of this tax benefit before end of the year. Call us at 305-760-8491 or firstname.lastname@example.org.