Have you heard about Section 179 of the U.S. Tax Code?
If not, you’re not alone. Many small business owners have never heard of the code and are missing out because of it.
WHAT IS SECTION 179?
The IRS 179 deduction was created to help small business owners reduce their yearly taxable income by investing back into the business through physical property.
In 2019, businesses are allowed to deduct up to $1,000,000 worth of property, but the property must be purchased this year.
WHAT QUALIFIES FOR THIS DEDUCTION?
The Section 179 deduction applies to tangible personal property such as machinery and equipment purchased for use in a trade or business, and if the taxpayer elects, qualified real property.
This means that any business equipment that you have purchased (or leased/financed) in 2019 will help you with your overall tax burden at the end of the year.
It also means that you still have time to invest back into your business and save money on taxes before the end of this month.
For our Managed Service clients, this would apply to the following:
- Switches – Take advantage of the newer, faster switches that are available today.
- Routers and Firewalls – These should be replaced every 2-3 years for security purposes.
- Off-the-Shelf Software – software that’s not customized for your business
- Wireless Access Points
- Phone Systems – VoIP or traditional
- Servers – These should be replaced every five years.
- Backup & Disaster Recovery Appliances – Do you have a reliable system that will support your business if you suffer from a natural or manmade disaster?
- Laptops and Ultrabooks – New technology is available with much longer battery life.
- Workstations and Monitors – Add a 2nd monitor for your key staff to increase productivity.
- Battery Backups – You need these when the power goes down.
- Scanners – Today’s scanners are faster and allow you to scan multiple documents at once.
- Storage SAN (Storage Area Networks), RAID (Redundant Array of Independent Disks) etc. – Digital picture files require lots of storage space
This is tax code is big for small business. It can significantly reduce the amount you owe this year in taxes, and it also allows you to use that money to increase your office environment, upgrade your existing setup, and maximize productivity heading into the new year.
You should check with your accountant for specifics around your business and industry, but feel free to reach out to us if this is something you might be able to take advantage of.
Here are some additional resources that can help you understand IRS Section 179: