The U.S. Senate has passed a major enhancement to Section 179 of the IRS tax code as of Tuesday, December 16!
Wait, don’t fall asleep! Sure, we’re talking about the tax code and Congress, but this is GOOD NEWS for businesses in San Francisco. What’s the catch? YOU HAVE TO ACT NOW!
You can read more about the benefits of the Section 179 tax deductions here, but essentially this allows businesses like yours to deduct the full purchase price of qualifying equipment or software that was either purchased or financed during the tax year. Not a partial price or the amount of tax you’d pay, but the entire full purchase price. That’s quite a chunk you can deduct from your gross income, and it doesn’t matter whether you paid in cash or you financed the sale.
Moreover, the total amount that a business can write off for 2014 has been increased from $25,000 to a whopping $500,000! That’s retroactive back to the beginning of this year, January 1, 2014.
BUT (and of course, there’s always a but): this enhancement will expire on December 31, 2014. It has only been approved for this year, so you only have the next two weeks to act.
Luckily, Section 179 has been designed to be easy to use. So long as you’ve bought or financed any eligible equipment between Jan 1st and Dec 31st, 2014, you just have to fill out a form from the IRS to claim the amount. You can read more about the process here.
Here’s an example of how this tax deduction works:
- Your business reports a 2014 profit of $100,000.
- If your business is in, say, a 30% tax bracket, you owe $35,000 in taxes.
- If you purchase or finance $100,000 worth of eligible Section 179 equipment during the tax year, you can write off the full amount of $100,000.
- Thus, you pay nothing in taxes, essentially saving $35,000.
As with all tax matters, make sure you contact your tax professional to ensure your business can benefit from this tax deduction. Most businesses can, but you should make sure you know for certain now so you can begin preparing to take advantage of it before the deadline of December 31.
At On Time Tech, we are dedicated to making your technology provide the best possible value for your business, whether that’s in improved productivity and efficiency from streamlined IT services and support, or in strategy and guidance on taking advantage of innovative IT solutions and opportunities like this. To find out more about how we can improve your technology experience in San Francisco, contact us today at (415) 294-5250 or email@example.com.