How Does Section 179 Impact Your Business?
When tax season comes around, your business needs to see what deductions you qualify for. You do not want to overlook a single thing because getting all the tax incentives available to you will reduce expenses and improve your overall budget. In order to assist companies, Congress has approved an expansion on tax deductions related to equipment purchases made by small businesses. This expansion is referred to as Section 179, and it can greatly affect your business.
This deduction has been around for a while now. However, Congress has increased the limit over the years. When it first came into existence, there was a limit of $10,000 imposed on how much businesses could deduct from their taxes. That number has steadily increased from one year to the next. Today, you can deduct hundreds of thousands of dollars from your company’s taxes thanks to this policy.
Throughout the year, you need to keep track of what you purchase so that you know exactly what can be deducted. Only certain items can be deducted. For example, under Section 179, only new or used products can be deducted, which means you cannot use this policy to deduct items that you leased or rented. Some of the types of property you can withhold from your yearly taxes include company vehicles, business machinery, office furniture, computers, software and much more. You cannot deduct purchases related to land acquisition.
It is also important to bear in mind that the items you plan to withhold from your taxes must be used by your business at least half the time. That means if you were to buy a car, it would need to be used for business purposes at least 50 percent of the time. If you simply purchase a vehicle for yourself and only occasionally use it for business trips, then it would not qualify. Additionally, the items you deduct cannot be given to you as a gift. You need to purchase the equipment for the express purpose of being used by your company.
The law concerning Section 179 often changes, so make sure to keep up to date with the current tax code to ensure you are getting the most out of your benefits. If you require assistance during tax season, then speak with a professional certified public accountant to make sure your forms are filled out to the fullest extent. Small businesses everywhere can benefit from this provision, so make sure you are not losing out on important incentives.