179 Reasons Business Owners Need This Tax Deduction
In the flurry of tax changes that happened for 2016, one of the most overlooked deductions by small business owners is the Section 179 tax deduction. This deduction was set up to allow business owners to deduct many different types of equipment used for their business. In fact, there were certain loopholes within this tax code to allow for the purchase of certain vehicles as well.
The IRS has set the Section 179 tax deduction limit in 2016 for $500,000 and the overall phase out is $2 million. There was a little known act that got enacted called PATH (Protecting Americans From Tax Hikes Act of 2015). PATH presented business owners with a significant opportunity to purchase software, technology, and equipment and if structured correctly expense all of it off in the year they pay for it versus depreciating it down the road.
One of the most frequently asked questions is, when business lease or buy equipment, whether or not they can take advantage of the Section 179 deduction. Obviously, you want to talk with your financial advisor or your accountant, but if you purchase the equipment and put it into use this year there is a good change that your property will qualify. Here is a short list of items that may count:
- Computers and Software
- Office Equipment and Fixtures
- Large Business Equipment and Machines
- Business Vehicles
- Single-Purpose Structures
- Manufacturing Tools
As most small businesses are doing well right now, being able to buy and expense computers, equipment, etc. may allow you capture back a bunch of your cash flow in immediate tax savings. Don’t forget to look closely under the hood at this piece of the tax code as a small business owner. This should give you 179 reasons to investigate this further.
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