As we head closer and closer to the end of the year, your time to take advantage of the Section 179 tax break is running out. Not sure what Section 179 is or what it can do for you? Read on to learn more about this opportunity to save on our hearing and balance equipment!
What is Section 179?
The U.S. government created established Section 179 as an incentive to encourage businesses to buy equipment and invest in themselves. It essentially allows a business to eliminate the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. For example, if you buy or lease an audiometer that qualifies, you can deduct the full purchase price from your gross income.
As the years have passed since its creation, the Section 179 is has become more beneficial to small businesses. It is one of the few government incentives available to small businesses and has been included in many recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179, the original intent of this tax code was to provide tax relief for small businesses.
How Does Section 179 Work?
Before Section 179, businesses would typically write off qualifying equipment in multiple installments over time through depreciation. For example, if you spent $10,000 on a new balance system, it would get written off $2,000 per year over five years. While it was better than no write-off at all, most business owners prefer the option to write off the entire equipment cost for the year they buy it.
That’s why Section 179 was put into legislation; to allow businesses to write off the entire purchase price of qualifying equipment for the current tax year. This has made a positive impact on many companies and the economy because it has encouraged more businesses to purchase needed equipment sooner than later. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2020 tax return.
Are There Any Limits to Section 179?
It sure does, but these limitations will likely not affect someone seeking hearing and balance equipment. There is a cap to the total amount that can be written off, and this year it is $1,040,000. Likewise, there are limits to the total amount of equipment that can be purchased, and that limit in 2020 is $2,590,000. After $2,590,000 is spent, the deduction begins to phase out on a dollar-for-dollar basis.
How Do I Take Advantage of Section 179?
All businesses that purchase or lease new equipment or software in 2020 qualify for Section 179. To learn more about this tax break and how you can benefit with it, reach out to your local e3 office. They’ll help you better understand which equipment qualifies and what you need to do to successfully write off any equipment you purchase. If you’re not sure what your local e3 office is or you need its contact info, click the button below!