Section 179 at a Glance for 2020
Here’s how to take advantage of VAR Technology Financing 90 Days Deferred – No payments on qualifying technology purchases for 90 Days!
- 2020 Deduction Limit = $1,040,000
This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2020, the equipment must be financed or purchased and put into service between January 1, 2020 and the end of the day on December 31, 2020.
- 2019 Spending Cap on equipment purchases = $2,590,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive” (because larger businesses that spend more than $3.5 million on equipment won’t get the deduction.)
- Bonus Depreciation: 100% for 2020
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.
Always feel free to reach out to your Fulcrum Group Fractional CIO for more details.
For 2018 – News Alert: Section 179 Increased to One Million for 2018
Jan 2, 2018 – With the passage and signing into law of H.R.1, aka, The Tax Cuts and Jobs Act, the deduction limit for Section 179 increases to $1,000,000 for 2018 and beyond. The limit on equipment purchases, likewise, has increased to $2.5 million.
Further, the bonus depreciation is 100% and is made retroactive to 9/27/2017 and good through 2022. The bonus depreciation also now includes used equipment.
What is the IRS Section 179 Deduction?
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Today, Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.
Essentially, it works like this: When your business buys certain items of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example). Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.
In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting over the next few years. That’s the whole purpose behind Section 179 – to motivate the American economy (and your business) to move in a positive direction. For most small businesses, the entire cost can be written-off on the 2018 tax return (up to $1,000,000).
Use this 2018 Section 179 Calculator to see how much the Section 179 tax deduction can save your company. Save even more with 90 Day Deferred Lease Payments!
Go here, for Fulcrum Group’s financing options and leasing application.
Some key projects we’re seeing people take advantage of right now, include:
- VOIP Phone Systems
- Virtual Server Implementations (Servers, Storage)
- Data Center Build Outs
- Network Switching and WiFi Upgrades
- New computers for staff (improve staff performance AND morale)
Take a look at some of the recent solutions we’ve put in place and consider the impact they could have in your own organization:
- Remote Access Solutions
- Other Cloud Solutions for Small/Med businesses
- Unified Communication – office phone system solutions
Want to know what your tax savings could be? Visit our updated Section 179 Tax Savings Calculator. We aren’t tax professionals, so please consult your tax professional prior to making any decision.
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