Tips for Writing Off Business Equipment with Section 179

Planning is Key

You have more than likely heard of this before, the Section 179 deduction is a generous tax break for businesses.

It allows you to write off the full cost of specific, tangible, & depreciable business assets in the same year they are placed into service. The amount you can deduct is up to $500,000. Section 179 acts as an extra incentive for business owners to invest in their business. Back in December 2015, the law was extended to carry through 2016.

So, now what?

Well, if you were super on top of your financial planning and tax preparation for 2016- you have already picked out all of your equipment purchases to receive the best deduction that works for you and your business. Your CPA already has the invoices and you are ready to file your 2016 taxes as soon as possible.

If you are like the rest of the world (you know, the kind who do their Christmas shopping the week before Christmas) this might be a new thought for you.

Here are a few tips for maximizing your deduction.

  • [icon type=”angle-double-right” class=”fa-li accent”]First– Plan ahead. Meet with your CPA to discuss your estimated tax liability. The best time for this is usually October or early November. If not this year, there is always next year.
  • [icon type=”angle-double-right” class=”fa-li accent”]Second– Avoid Last Minute Purchases. The equipment must be on site and ready for use. Think about the timing of when you purchase the item and when it is delivered and installed.
  • [icon type=”angle-double-right” class=”fa-li accent”]Third– Consider leasing equipment. Sometimes that works. The Lease has to be structured a certain way so that you are basically considered the owner. Check with your CPA.
  • [icon type=”angle-double-right” class=”fa-li accent”]Fourth– Avoid buying from family. (Sorry fam.) Business assets acquired from “related persons” do not qualify for the section 179 Deduction.
  • [icon type=”angle-double-right” class=”fa-li accent”]Fifth– As always, keep detailed records. You must have the specific identification of each piece, as well as how you acquired the property, the person you acquired it from, and when you placed it into service. Basically, keep the invoice and the delivery confirmation for your accountant.

Technology equipment refreshes are a great way to invest in your company and the productivity. Call us if you are curious how an upgraded server, workstations, or phone system might help more than your 2016 bottom line.

(I’m looking at you Windows XP and Windows Server 2003 users….)

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