Figuring out your business taxes each year can be frustrating. It’s important to know what deductions you are entitled to so that you can keep your taxes where they should be. The Section 179 tax deduction may be able to help you maintain your bottom line and keep more of what your business brings in. You will need to consult with a professional tax consultant to find out whether or not this type of deduction will be useful for your business.
What Is a Section 179 Deduction?
A section 179 deduction can help a business owner recover from having to pay for various types of new business equipment. Purchasing business equipment that is used for general purposes may be eligible for a section 179 deduction. Business equipment will eventually wear out with constant use. The cost of replacing or upgrading your equipment can be a huge obstacle for a business, no matter how big it is. Using a section 179 deduction can minimize some of the pressure of having to pay for the equipment out of pocket.
What Qualifies for a Section 179 Deduction?
There are many different types of business equipment that will qualify for a Section 179 deduction for 2021. As long as the equipment is used for the business more than half of the time, it will be eligible for this type of deduction. Equipment options that are eligible for a Section 179 deduction include:
- Cell phones and other mobile devices that are used for both personal and professional use
- Business vehicles with a gross weight of over 6,000 pounds
- Off the shelf software
- Office furniture
Building property that is not considered structural and includes manufacturing equipment, industrial cutters, printing presses, etc.
You can get a full list of eligible equipment from a professional tax consultant. The list is rather extensive and many things may be eligible that you might not expect.
What Is the Maximum Section 179 Deduction for the 2021 Tax Year?
There are limits to the amount you can claim under the Section 179 deduction. For the 2020 tax year, you are able to write off just over $1 million with total purchases being capped at just over $2.5 million. These amounts change from year to year. It is up to you to find out what the limits are each year and identify what items you have that may qualify. Keeping an updated list is important so you get to take advantage of every deduction your business is entitled to.
Being able to make the most out of every deduction possible is important if you want to run a profitable business. The Section 179 deduction is a great way to overcome the financial burden of having to replace expensive office equipment. If you want to make the most of this type of deduction, contact a professional tax consultant and let them go over things with you. They may be able to find additional items that you may not have known were eligible. Make your appointment now so you can get a head start on your 2021 taxes.