Section 179 Expense is a valuable tax incentive for small business owners and self-employed individuals in the United States. The purpose of this tax code is to encourage business investment by allowing business owners to deduct the full cost of qualifying equipment and software from their taxable income in the year of purchase. This is a change from the traditional method of depreciating such purchases over several years.
To qualify for Section 179 Expense, the equipment and software must be used for business purposes, such as office furniture, machinery, vehicles, and computer hardware and software. There are limits on the amount that can be claimed each year, which can vary depending on the year and the type of equipment or software being purchased.
- Section 179 Expense applies to businesses and self-employed individuals.
- The tax incentive allows for writing off the full purchase price of qualifying equipment and software in the same tax year.
- The equipment and software must be used for business purposes and meet certain criteria.
- Office furniture and equipment
- Business vehicles with a gross vehicle weight over 6,000 pounds
- Machinery and equipment used in manufacturing or production
- Computer hardware and software
- Plan ahead: Make sure to factor the tax savings into your budget and plan accordingly.
- Keep receipts and documentation: Make sure to keep detailed records of all equipment and software purchases to support your claim.
- Be mindful of spending limits: There is an annual spending limit on equipment and software purchases, so be mindful of this limit when making purchases.
Section 179 Expense can provide significant tax savings for small business owners and self-employed individuals who make investments in qualifying equipment and software. However, it is important to be aware of the criteria and spending limits for this tax incentive. Careful planning and record-keeping can help you take full advantage of this tax benefit.