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179 tax code deductions

At this time of year, many people are busy thinking about travel plans for Thanksgiving to see family, as well as bracing themselves for holiday gift shopping. But for business owners and those responsible for the bottom line at their place of employment, they are busy thinking about closing out the year by maximizing tax savings.

Section 179 is an IRS tax code, which — in its very nature of being a tax code — can sound intimidating. However, the truth is, the code is pretty straight forward. This tax code simply enables businesses to use deductions on the full cost of qualifying equipment, either purchased or financed, during that calendar year.

In other words, buying a piece of equipment that qualifies for this tax code can be deducted from the full purchase price tag, off of the gross income. This incentive was designed by the government as a means to encourage businesses to procure and purchase their own equipment.

This particular tax deduction got a bad rap many years ago; some claimed it was a loophole to buy fancy SUVs, as ridiculous as that sounds. Nowadays, Section 179 is legitimately seen as an incentive that truly helps small businesses.

While larger businesses also have an advantage from using Section 179 and Bonus Depreciation, the initial purpose of the legislation was to provide invaluable tax relief for smaller businesses.

How it Works

The dedicated website for Section 179 explains it best:

“In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).

Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.

And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment for the current tax year.

This has made a big difference for many companies (and the economy in general). Businesses have used Section 179 to purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2019 tax return (up to $1,000,000).”

Section 179 Limits

While the benefits are vast, it does come with some limits, too. The cap for total write-offs is $1 million in 2019, and limits to the total amount of equipment purchased are $2.5 million in 2019. Above and beyond that point, deductions are tapered off on a dollar-for-dollar basis and eventually go away completely once $3.5 million in purchases is met. This spending threshold is the very reason why the tax code was originally intended for small to medium-sized businesses.

Who Qualifies for Section 179?

Any business that purchases, leases, and finances a piece of new and/or used equipment, and is used for business purposes, should qualify for Section 179 during the 2019 tax year (between January 1, 2019, and December 31, 2019).

Of course there are restrictions, but generally speaking, the majority of tangible items used by U.S. businesses will qualify, such as “off-the-shelf” software as well as vehicles that are used for business purposes.

Check out this list of qualifying equipment and the basic guidelines for what property is included under tax code Section 179.

Take Advantage of the Code

Although there are some benefits for larger corporations, Section 179 is the result of Stimulus Bills that genuinely serve to help small and medium-sized businesses. Utilizing Section 179’s tax code, along with using refurbished medical equipment, is an extraordinary way to cut costs in the business of healthcare. Auxo Medical’s mission is to provide reliable, trustworthy refurbished and reconditioned medical equipment, as well as serve as a valuable resource for the healthcare community.

 

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