Let’s be honest, 2020 hasn’t been like any years past. As we all continue to navigate these tumultuous times, we can try to look at it as a diamond in the rough.
To help with the financial burdens of 2020, there is always Section 179 of the IRS Tax Code,
which allows your business to deduct the entire purchase price of qualifying equipment and/or software from the gross income - as long as the qualifying equipment is acquired before the end of the year. As a bonus, the 2020 bonus depreciation is 100%.
Here are the need-to-knows about the deduction:
- Any equipment, computers, off-the-shelf software, tangible property, vehicles, office furniture and office equipment, purchased and put into use before December 31st, 2020 is eligible for qualification. These objects qualify whether new or used, and whether purchased outright, leased, or financed.
- The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify.
- For 2020, the total amount for a single piece of equipment is $1,040,000. The total deduction for all purchases is $2,590,000.
- Bonus depreciation is offered some years, and some years it isn’t. In 2020, it’s being offered at 100%.
So what should you do next?
Research. Research the best equipment for your needs. Then, do your own research on the Section 179 deduction to learn more about how your business can benefit from it. And finally, talk with an accountant. Tax laws can be tricky, and an accountant can examine your specific scenario and walk through your scenario with you. Take note of lead times and be sure the equipment is put into use prior to December 31st.
For more information, visit these sites:
* This blog is not intended to offer legal or financial advice. Consult with a certified professional for questions about your scenario.