SECTION 179

If you invest in your business, the government will lower your company's taxes.

WHAT IT IS:

The Section 179 Tax Deduction was created to encourage small businesses to invest in themselves. Businesses can purchase, lease, or finance necessary equipment and deduct the full purchase price, up to $1,000,000, from their gross income on taxes for the year (starting in 2018 and beyond). In 2017, the deduction was only up to $500,000, so this deduction increase can have a major impact on many businesses.

 

WHY IT’S GOOD:

Unlike some deductions, the financial impact of Section 179 is immediate (i.e. whenever your company files its taxes). Rather than depreciating property over several years, the deduction takes effect right away.

 

WHAT’S COVERED:

Some equipment eligible for this deduction includes new and used/refurbished: computers, servers, software, office furniture and equipment, vehicles, roofs, fire/alarm/security systems, and HVAC (heating, ventilation, and air conditioning systems).

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WHERE TO GO:

To take advantage of these Section 179 limits, equipment must be purchased and put into service by midnight on the last day of the year you’re claiming the deduction (e.g. by midnight on 12/31/2020 if you’re claiming the deduction for tax year 2020). Use IRS Form 4562 to claim your deduction and determine covered equipment. To complete Form 4562, see the IRS instructions.

Disclaimer: Section 179 deductions can be complicated. This article is not intended to be tax or legal advice, or to educate you completely on the matter. Tax regulations change frequently. Consult your tax professional before buying property with the intent to take a Section 179 deduction.

Mann Consulting, LLC

282 Second St. #400

San Francisco, CA 94105

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