Section 179 Information for Businesses in Dallas and Fort Worth
Small to mid-sized businesses have questions about whether specific expenses may qualify as a tax deduction – and for a good reason. Claiming relevant tax deductions is a crucial aspect of managing a business’s finances and maximizing profit.
However, every once in a while, businesses will make an excessively aggressive list of deductions that could quickly earn the attention of the Internal Revenue Service.
For small to mid-sized businesses in Dallas and Fort Worth, there are numerous potential tax deductions that your business can claim. Section 179 allows businesses to deduct the full purchase price of qualifying equipment purchased, leased, or financed during the tax year.
Is your business in need of new equipment and software? Have you been avoiding acquiring equipment because of capital constraints or other concerns? Consider the tax-saving advantages of the Section 179 tax benefit. This year, in 2021, you’re able to deduct up to $1,050,000 for the purchase of new or used equipment, software, and other assets.
IRS Section 179 Deduction FAQs
What Is the IRS Section 179 Deduction?
Section 179 lets businesses take a deduction equivalent to the full purchase price of a qualifying piece of equipment. Section 179 means businesses like yours can reduce their taxable income, and eventually the tax burden.
When Is The Deadline For This Year?
The deadline for Section 179 is always at midnight, December 31st. To take advantage of Section 179 in 2021, businesses must purchase, lease, or finance their equipment, and put it into use by midnight 12/31/2021.
What Are The Deductions and Limitations Under Section 179?
The max you can deduct under Section 179 is $1,050,000, and you can purchase for the full deduction at $2,620,000. Therefore, if purchased equipment costs more than $2,620,000, the deduction decreases at a rate of dollar for dollar. The deduction will reach zero when the cost of equipment reaches $3,670,000.
Can You Lease or Finance Equipment And Still Qualify For Section 179?
Certain business equipment that is financed or leased qualifies for Section 179. Section 179 even applies if you have to make payments for equipment and software over a multi-year span. However, the equipment and software must be put into use for business purposes to quality.
Applying the Section 179 deduction when you purchase equipment is fairly simple. Equipment is purchased and you take the proper steps outlined by the IRS to deduct the purchase price from your gross income. Leasing or financing equipment can be advantageous for businesses that are focused on their budgets and need to make important hardware or off-the-shelf software upgrades.
Through the Section 179 deduction, your business can deduct the full purchase price of financed or leased equipment and/or software without having to pay the total purchase price upfront. The amount you deduct from your 2021 tax burden can exceed your payment amounts.
Can Used Equipment Be Written Off Under IRS Section 179?
Many business owners have had positive reactions to the fact that used equipment can be purchased and written off under Section 179. Being able to purchase used equipment is a great benefit to businesses because it allows them to purchase needed equipment at a reduced price.
What Types of Property Qualify for the IRS 179 Tax Deduction?
The Section 179 deduction applies to tangible personal property. The equipment must last over one year. Possible qualifying purchases include:
- Office equipment
- Office furniture
- Computer software
- Computer hardware
Is It Time to Upgrade Your Business Technology?
If you’re considering upgrading your business technology through the 179 tax deduction, now is a perfect time. What types of technology equipment are eligible?
- Computers, mobile devices, workstations, printers
- Servers and server upgrades
- Network security hardware and routers
- Microsoft 365
- Other off-the-shelf software
This is a significant advantage that your business can take advantage of if you want to buy equipment and reduce your tax burden.
How Often Should the Equipment Be Used?
The qualifying equipment and/or software must be used for business purposes more than 50% of the time to qualify for the deduction.
What Are the Benefits of Upgrading Your Business Technology?
Upgrading business technology allows small and mid-sized businesses to save a significant amount of money while staying ahead of the competition. Upgrading technology will help your operations run smoothly. When your equipment takes too long to start up, your employees can lose a significant amount of precious time. Productivity and efficiency will slip, and your business operations will suffer.
Small and mid-sized businesses will feel this lost time more than larger businesses. By making upgrades to technology, productivity and efficiency will increase, resulting in less downtime. If it’s been a while since you made an investment in new technology, your equipment and hardware might be reaching their end-of-life. With older computers, any new software you purchase or lease may not run properly or may run slower than it should. Therefore, making an investment in new technology and software and making the most of the IRS Section 179 deductions is an opportunity you should not pass up.
How Corptek Can Help
As a provider of IT services and IT support throughout Dallas and Fort Worth, we believe it’s important to let businesses know how they can make the most of IT infrastructure and services. With the proper resources in your business, you will give your business a better chance to achieve unmatched business performance.
The IRS Section 179 tax deduction is one example of how Dallas and Fort Worth businesses can improve their bottom line while improving their IT infrastructure. Corptek can help you determine the right technology solutions to help your business leverage the Section 179 deduction before 2021.
A technology upgrade is more than a morale booster for your employees, it will also have an impact on your customers and clients too. When your employees are happy, your customers and clients will also be happy. Equipment and systems that run seamlessly and quickly will affect your entire business operations.
Contact Corptek today for a consultation to find out how we can help you and your business.