How to Make the Most of Section 179 Tax Deductions
When managing the overall financial health of your business, it’s important to be well-informed about the latest tax deductions that are available to you. This is particularly true during a year that is as unpredictable as 2020, because when a business is seeking to maximize its bottom line, deductions for things such as equipment, machinery, and supplies can really add up.
The team at Universal Finance can help business owners improve their company’s tax position by using Section 179 to expense the full cost of certain assets during the year the assets went into service. Instead of depreciating costs over several years, an asset’s entire cost can be deducted in the year that it was available for use. These steps will reduce your company’s taxable income and create tax savings.
RULES FOR SECTION 179 DEDUCTIONS:
Eligible equipment must be new to your business – even used equipment that is new to your company qualifies
Section 179 applies to tangible personal property and qualified real property – check with your tax professional to determine if your purchases qualify.
The deduction limit is $1,040,000 for tax year 2020 and is reduced by the amount by which the cost exceeds $2,590,000.
All assets must be placed in service by December 31 of the tax year.Once a business has reached its Section 179 limit, bonus depreciation kicks in and a 100-percent depreciation deduction can be done in the first year for property that includes machinery, equipment, and computers that were placed in service after Sept. 27, 2017, and before Jan. 1, 2023. Businesses may also be eligible for the Section 179 deduction, the bonus depreciation deduction or a combination of both.
We hope this information has been helpful as you navigate the best way to leverage all the deductions that available to your business within the parameters of Section 179. If you still have questions, contact Universal Finance and we will work with you to give you all the guidance you need to take advantage of the benefits that Section 179 affords your business.
