Are you are familiar with Section 179, accelerated tax benefit. Section 179 of the IRS tax code allows businesses to deduct THE FULL PURCHASE PRICE of any office furniture, equipment, and/or software purchased or financed during a tax year. That means that if you buy (or lease) furniture for your office before the end of the year, you can deduct the full purchase price from your gross income. Who doesn’t like a tax break? I know I do!
In years past, when companies purchased qualifying equipment, it typically wrote off only a little bit at a time through depreciation. So if your company purchased office furniture for $50,000.00 it got to write off (say) $10,000.00 per year, for five years.
So who qualifies for Section 179? All businesses that purchase, finance, and/or lease NEW or USED business equipment during tax year 2020 should qualify for the Section 179 Deduction (assuming they spend less than $3,630,000.)
This obviously has made a huge difference for most companies. Businesses have used Section 179 to purchase much needed equipment instead of waiting. For most small businesses, the entire cost of the purchase can be written-off on the 2020 tax return.
There are limits with Section 179 that you should be aware of though. For the year 2020, the cap for the total amount written off is $1,040,000. And the limits to the total amount of the equipment purchased is $2,590,000. This deduction begins to phase out on a dollar-for-dollar basis after $2,590,000 is spent by a given business (thus the entire deduction goes away once $3,630,000 in purchases is reached). So this makes it a true small and medium sized business deduction.
For more information we recommend visiting the IRS website or talking to your accountant.
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