These are the highlights of our webinar entitled Section 179 Tax Credit For Your Business and how you can realize its benefits. Puryear IT cares about the well-being and success of your company and since we have some insight on Section 179, and because a lot of tech items are eligible, we wanted to make sure that this information was passed along to you.
Section 179 was created to benefit small to medium-sized businesses by encouraging growth and stimulating the economy. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the full purchase price from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Here are a few examples of items eligible for the deduction:
- New equipment or office furniture purchased or leased for business use.
- Tangible personal property used in business.
- Business-use vehicles with a gross vehicle weight of over 6,000 pounds.
- Computers, printers, scanners, copiers, servers, routers, etc.
- Software (“off-the-shelf” available to the public – not written specifically for your business).
Here's how Section 179 works:
- Keep track of your business-related equipment purchases (where you made the purchase, how it was acquired, and when it was placed in service).
- Fill our Form 4562 and include it in your annual tax return.
- The deductions reduce your taxable income by the total amount claimed (taxable income cannot be reduced below zero and traditional depreciation write-offs may apply if your business is operating at a loss for the year – consult your tax professional).
Here are some other important things to know:
- Items must be purchased or leased in the calendar year in which you are claiming the deduction and must be placed into service in the same calendar year.
- Items that are partial use must be used for business greater than 50% of the time and deductions should be based on the percentage of time used for business purposes.
- If the amount of time that an item is used for business changes then the deduction must be updated.
This and a lot more was covered in our Section 179 Tax Credit For Your Business webinar:
