Save On Expenses in 2019 with Section 179
As we approach the end of 2019, it is helpful to delve into some of the financial aspects of purchasing equipment for your practice in preparation for the upcoming tax season. Here are a few quick facts about Section 179 qualifying expenses:
Can I deduct the cost of equipment that I buy to use in my business?
Short answer: Yes, and there are two methods you can use.
The first option is to capitalize and depreciate under code section 167 using the Modified Accelerated Cost Recovery System(MACRS). JTECH’s devices are most likely five year life assets, and you can find the table published by the Internal Revenue Service (IRS), which lists the depreciation percentages each year.
The second option is to capitalize and expense the equipment under code section 179. This allows you to write off up to 100% of the equipment purchases, but includes some caveats. You can only elect this option if you have net income, and the expense will only be applied to the extent of this net income.
Who is eligible for the Section 179 deduction?
Small and medium businesses can benefit greatly by utilizing Section 179. Recent changes to federal tax code have increased the maximum deduction up to $1,000,000 on capital expenses, with a cap at $2,500.000. The biggest stipulation is that equipment and software must be financed and in service by midnight December 31, 2019 to qualify.
How Much Can I Save on My Taxes in 2019?
It depends on the amount of qualifying equipment and software that you purchase and put into use. See the handy Section 179 Calculator that's fully updated for 2019 for an example of how much you can save.
What Sort of Equipment Qualifies in 2019?
Most tangible business equipment qualifies. Click here for qualifying property.
When Do I Have to Do This By?
Section 179 for 2019 expires midnight, 12/31/2019. If you wish to deduct the full price of your equipment from your 2019 taxes and take advantage of the higher deduction limits, it must be purchased and put into service by then. Many businesses are finding Section 179 Qualified Financing to be an attractive option in 2019, especially since the expected Federal Discount Rate increases don't leave much time for action. JTECH also offers in-house express financing on purchases, which include a shorter qualification process and no credit check. To learn more or to apply for our in-house financing, contact us today.
Does the Section 179 deduction apply if I finance my equipment?
Yes. For the purposes of the deduction, it doesn’t matter whether you finance the equipment or purchase it outright. The only thing that matters is the date in which it is placed into service.
What are some of the limits for the 179 deduction?
Section 179 does come with limits - there are caps to the total deduction ($1,000,000 for 2019), and limits to the total amount spent on equipment purchases ($2,500,000 in 2019). The deduction also provides a 100% bonus first-year depreciation for any amount over $1,000,000 spent by a given business, so this makes it a true small and medium-sized business deduction. Another point to consider is that purchases for the 179 deduction cannot create a loss in the business. You should consult a tax professional for guidance about the limits of Section 179.
What do I need to do to elect Section 179 on my tax return?
To elect the Section 179 deduction, you need to fill out Part One of IRS form 4562, but your tax professional or software will guide you through the process step-by-step.
Can JTECH Customers receive a credit under the American Disability Act (ADA) for products that provide accommodations?
Based upon a liberal reading of the tax code under section 44, an aggressive approach would allow you to take this credit. The credit may not cover the entire purchase, but it may cover part. It is important that you consult your own tax professional to assist you with the determining whether your purchase qualifies and the calculation of this credit.
Are there both tax advantages and cash flow advantages to financing on-site through JTECH?
There can be both tax and cash flow advantages to financing through JTECH. When you finance, you are required to put less money down up-front, and you could still be allowed to write it off at 100% under Section 179. With the added potential credit from the ADA, you could end up with a win-win, which can result in positive cash flow for the year of purchase. It’s important to remember: the tax advantages all come for the year in which the equipment is purchased.
JTECH's in-house financing provides benefits such as low monthly payments, no credit check required, and it allows you to get started with a significantly smaller up-front investment. Utilizing the maximum potential deductions of Section 179 could result in saving thousands of dollars on your taxes, while your investment begins to make your business revenue.
More information on Section 179 can be found at http://www.section179.org/.
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