If you are even considering buying equipment for your business in the next several months, you have to factor in the Section 179 deductions available to you or you could miss out on major tax savings.
Here’s is what you need to know in a nutshell:
- Section 179 refers to the internal revenue service tax code that allows a business to take a current year deduction of up to $250,000.
- The Economic Stimulus Act of 2008 doubled the deduction limit from $125,000 to $250,000 and the American Recovery and Reinvestment Act of 2009 extended this deduction into 2009.
- Qualifying equipment must be in place before December 31, 2009 to claim the deduction this year.
Consider this example:
Equipment cost: $30,000
Total first year deduction: $30,000
Cash savings on your equipment purchase*: $10,500
Cost of new equipment after tax savings: $19,500
*Assuming a 35% tax bracket
Direct Capital has developed a free resource to answer your questions at Section179.info, including the ability to calculate your estimated tax savings. There you can read all the details you need to know to take advantage of this potentially huge deduction.