Note from Art: This was posted on Docutrends Blog/Newsletter, thier link is at the bottom of the page.
Understanding the Section 179 Tax Benefit for Office Equipment Purchases
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment (includes Copiers, Printers, MFPs etc.) purchased or financed during the tax year. In 2011, it goes up to $500,000 (from $250,000 in 2010). It's an incentive created by the U.S. Government to encourage businesses to buy equipment and invest in themselves.
When your business buys equipment, you typically have to write it off a little at a time through depreciation over the life of that equipment. Section 179 lets you write it all off now, even if you lease the purchase, with the idea that through this incentive, you just might add more equipment this year instead of waiting. Here's a simple example of the potential for huge savings.
Here's a simple example:
$150,000 in equipment purchases in 2011
Normally you'd have to depreciate it over 5 years (or so), $30,000 at a time. Assuming a 35% tax rate ($30,000 x .35 = $10,500), that's a real cost-savings of $10,500 every year for 5 years. Better than nothing, sure, but with Section 179, it looks like this:
$150,000 - Same 35% tax rate ($150,000 x .35 = $52,500), and that's over $50,000 in REAL, TAX dollars that you would have had to give to Uncle Sam. Suddenly, that $150,000 in equipment only costs you $97,500, and all you have to do is put the equipment in service before December 31st to qualify for the deduction. Even if you finance (or lease) it, and haven't even made a payment yet, you can still take the deduction. Pretty attractive!
Now, there are limits to Section 179. Anything over the $500,000 cap must be depreciated as you normally would, over the life of the equipment, and if you exceed $2,000,000 in total equipment purchases for the year, the amount that can be deducted via Section 179 starts to diminish dollar for dollar, so this is very much a small and medium sized business incentive.
If you've been thinking about adding equipment or software, but just haven't been able to pull the trigger, contact us today to find out how easy we can make it for you to get the equipment you need and the write-off you deserve.
http://www.docutrend.com/quart...-equipment-purchases
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