Naturally, small businesses want to maximize their deductions to minimize taxes. However, they might not be aware of a certain tax code that benefits them: Section 179.
As the year winds down, businesses can strategically spend their remaining end-of-the-year dollars to take advantage of the Section 179 tax deduction. Through this tax deduction, eligible businesses can deduct the purchase price of qualified hardware and off-the-shelf software.
Why do you need to know this? This is a great opportunity to upgrade that old software and computer hardware!
Section 179 deductions can be used for tangible personal property purchased for your business that the IRS has determined will last more than one year. The types of property include:
- Office furniture
- Business equipment
- Business vehicles weighing more than 6,000 pounds
What is non-qualifying?
- Any property you might inherit, obtain from an organization you control or can purchase from a relative
- Any personal property converted to business property that is used less than 50 percent of the time on business needs
- Land and permanent structures
- Furnaces or air conditioning units
- Any property meant for use outside of the U.S.
- Intangible property such at copyrights or patents
What is the Deduction limit?
What is the spending cap on equipment purchases?
What is the deadline for ordering?
The Section specifies that all orders must be paid and received by December 31, 2020.
DISCLAIMER: This article does not constitute professional tax advice; it is only intended to be informational and build awareness about possible tax deductions that business owners might qualify for. Individual tax circumstances may vary. Please talk with your accountant or other professional tax adviser before claiming any deductions.
Biz Technology Solutions partners with businesses to manage, support, and streamline their IT needs. Our unified business solutions consist of Managed IT Services, Application Development, and IT Professional Services. Contact us today at (704) 658-1707 to learn how we can help your organization leverage more effective collaboration to gain a competitive advantage over the competition.