Small and medium-sized businesses can greatly benefit from the 2021 Section 179 tax break. A business like yours could have the benefit of a legal tax incentive to lower your operating costs, but also maintain the flow of capital for other elements in your business.
If you’ve been thinking of upgrading your tech equipment and software, read on to learn how the Section 179 tax break can work in your favor.
Section 179 Explained
This tax break allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense and it’s eligible for more than you think!
Section 179 is eligible for your business’s general expenses purchased, leased, or financed during the tax year. For all the qualifying equipment you buy or lease, you get to deduct the full purchase price from your gross income.
What Tech Qualifies for the Section 179 Deduction?
Workstations, servers, on-site backup devices, hard drives, phone system hardware, etc.
Any of the equipment above that has been refurbished or resold
Software that’s available to the public that hasn’t been custom engineered. You must use the software for income-producing activity and expect it to be in use for at least one year.
Other common examples of qualified expenses are:
- Heavy equipment
- Tangible personal property
- Office equipment
- Office furniture
- Certain improvements to qualified real property
Additionally, financing your tech equipment might be the most profitable decision you make this year. Pursuing the option of a structured equipment lease you are able to write off the entire amount of upgrade for only a fraction of the cost.
What Is the Section 179 Deadline?
To take advantage of the deduction for the 2021 year, you must have your software and equipment in use for your business by the last day of the year, December 31st, 2021.
How to File for Section 179
It’s also important to note that section 179 is not an automatic deduction. You must elect to take the deduction by filling out Part 1 of IRS form 4562 which is available for free.
Taking advantage of the 179 deductions provides the momentum you need heading into the new year with upgrades for equipment and software for your small or medium-sized business. Before making any changes to your environment be sure to consult our team and WheelHouse IT. To make sure you are making the right additions and subtractions, we can guide your every step.
WheelHouse IT can help you determine the right technology to help your business take full advantage of the Section 179 deduction before the end of the year.
Disclaimer – The Section 179 tax write-off for purchased, financed, or leased equipment expires 12/31/21. Bonus deduction is available on equipment placed in service on or before 12/31/21. This article does not serve as tax advice. WheelHouse IT encourages you to consult your tax professional before making a purchase.