Section 179 Calculator + Financing

Section 179 Calculator + Financing

This month, we peeled back the layers of leveraging Section 179’s tax code — from understanding what it is, how to cash in on it, and when the qualifying timeframe is eligible to use the deduction.

To round out this educational series, we are highlighting how to go about financing and leasing equipment, as well as using the Section 179 calculator in order to estimate your potential savings.

Financing and Leasing Equipment

A lucrative decision to close the books on 2019 would be to utilize Section 179, specifically, with a lease and/or financing a piece of equipment.

Taxes saved through the Section 179 deduction will most likely surpass your cash expenditures for the year. This is possible when combining an appropriately constructed equipment lease or equipment finance agreement, together with a complete Section 179 deduction. The tax code is a tool that amplifies your company’s bottomline, allowing the addition of new equipment, vehicles, as well as software.

The use of qualified financing for business equipment purchases is encouraged by the official tax code’s website, Section179.org. Additionally, there is even a bonus involved! Click this link for details on the bonus.

The Benefits of Leasing and Financing

A crystal clear benefit to leasing / financing equipment or software, together with Section 179’s deduction, is that their full amount can be deducted, but you do not actually have to pay the full amount in 2019. The savings in taxes could surpass the payments; it’s hard to believe, but it’s true. The deduction’s tax savings could enable your company’s bank records to be larger, vs. never financing the equipment to begin with.

Furthermore, did you realize that your business can lease equipment and still leverage Section 179’s deductions? The primary perk of a non-tax capital lease is enjoying the Section 179 deduction, but only needing to make smaller payments. A non-tax capital lease allows you to procure it and utilize the deduction, but not having to actually spend that amount this calendar year…which reduces the out-of-pocket cash needed. In some instances, the amount saved in taxes could be more than the collective total of the first year’s payments.

It is also possible to acquire an equipment loan using a Section 179 EFA (Qualified Equipment Finance Agreement) and still capture the full deduction.

You can structure a Section 179 qualified equipment lease or financing agreement by clicking here. Section179.org suggests working with an underwriter from Crest Capital.

Section 179 Calculator

If you are deciding on possibly purchasing or leasing equipment in the 2019 tax year, the Section 179 Deduction Calculatoris a helpful tool to make that call and see for yourself how it can have a significant impact on your equipment costs.

It is a simple calculator that can help come up with an estimate on your potential tax savings. All you need to do is input the purchase price of the equipment and/or software, and the calculator will tell the rest of the story.

Please note that this Section 179 calculator fully indicates the current deduction limits, as well as takes into account any amendments or bonus depreciation implications.

Example Calculation

Section179.org illustrates an example of using a qualified equipment cost for a sample calculation.

In their example, $75,000 in equipment purchased would cost $48,750, a savings of $26,250. This is a perfect demonstration that boils down what is a stake here — thousands of dollars in your pocket due to procuring equipment that you needed regardless.

Don’t forget, to qualify for Section 179’s deduction, the equipment or software must be purchased, financed or leased, and put into service, no later than December 31, 2019.

For any questions regarding refurbished medical equipment, and taking advantage of these tremendous tax savings, reach out to our team at Auxo Medical.

Changes, Updates and Insights for Section 179 in 2019

179 tax code

As a follow-up to our recent Section 179 blog post, explaining the ins and outs of the tax code, it’s also important to understand updates for this calendar year.

2019 Limits for Section 179 Tax Code

For 2019, the deduction maximum cap was increased to $1 million, a significant incentive. This allows businesses to deduct the full expense of their medical equipment off of their taxes this year, which can be quite impactful for the end of year financials.

This deduction is valid toward acquiring new and used equipment, as well as software that is “off the shelf.” It also must be financed or purchased, and put to use between January 1, 2019 and December 31, 2019 by midnight.

Here is a Section 179 free download of the Form 4562 needed to utilize this deduction.

Tax Breaks for Small and Medium Sized Business

The 179 tax code originated to help support small to medium-sized businesses. While the cap for total deductions is $1 million in 2019, the limits for the total amount of equipment purchased this year is $2.5 million. Deductions ultimately go away completely once reaching $3.5 million in purchases.

The Future Looks Bright

Historically, Section 179 has had a lot of twists and turns. However, in the past few years, the U.S. Congress put an end to the ongoing changes and mandated that the Tax Deduction limit is now permanent. The limit was increased to $1 million indefinitely beginning in 2019. This is comforting for small and medium sized businesses, so they can plan accordingly and take advantage of the deductions earlier in the year.

Section 179 Qualified Materials

Nearly all types of business equipment that a business buys or finances should qualify for the Section 179 deduction. The equipment itself does not need to be new, but it must be new to the business for the calendar year when it is being used as a deduction.

Here is the list of material goods that generally qualify, according to the official Section 179 website:

  • Equipment (machines, etc.) purchased for business use
  • Tangible personal property used in business
  • Business Vehicles with a gross vehicle weight in excess of 6,000 lbs (see Section 179 Vehicle Deductions)
  • Computers
  • Computer “Off-the-Shelf” Software
  • Office Furniture
  • Office Equipment
  • Property attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools and equipment)
  • Partial Business Use (equipment that is purchased for business use and personal use: generally, your deduction will be based on the percentage of time you use the equipment for business purposes).
  • Certain improvements to existing non-residential buildings: fire suppression, alarms and security systems, HVAC, and roofing.

Section 179 Financing

Many businesses are finding the Section 179 Qualified Financing  to be an appealing possibility, particularly with a variety of anticipated Federal Discount Rate increases on the horizon.

With reasonably priced monthly payments, and minimal or no money down needed beforehand, financing equipment and leveraging Section 179 can add value to your business’ bottom line now and into the future.

If you would like to talk about utilizing the tax code deductions on refurbished medical equipment, contact our team at Auxo Medical — we would be happy to help assist you.

What You Should Know About Section 179 Tax Code Deductions

179 tax code deductions

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