If you purchase or finance qualifying equipment and software that your business needs such as a Document management system you may be able to write off the full purchase price during that tax year.
This is available for most new and used capital equipment, and also includes certain software. Section 179 allows businesses to write-off up to $500,000 of qualified capital expenditures subject to a dollar-for-dollar phase-out once these expenditures exceed $2,000,000 in the 2013 tax year. The bonus depreciation was also reinstated to 50% by the ‘American Taxpayer Relief Act’ which allows larger businesses that exceed the $2,000,000 cap to write-off 50% of qualified assets using first year Bonus Depreciation. Small businesses that are not profitable in 2013 can use 50% Bonus Depreciation (on new equipment only) and carry-forward the loss to future profitable years.
Changes to Section 179 of the IRS tax code encourage businesses to make investments in equipment and software, whether it is a purchase or lease. The changes in deduction parameters of Section 179 are considerable and will certainly save businesses money.
The total deduction was increased from $250,000 to $500,000 and the total limit of equipment purchases was upped to $2 million.
Most types of business equipment do qualify for the Section 179 deduction, including docSTAR products. It’s important to note that changes can be made to the tax code yearly, so the potential savings in 2011 may not be possible in 2012.
To determine your potential deduction for the tax year ending December 31, 2013 try this Section 179 tax deduction calculator.