What is the Tax Code Section 179 Deduction?
When a business buys equipment or software, the business can get tax deductions for buying and using them. These deductions are basically depreciation, the expense of using equipment and software over a certain number of years. The good thing is that these purchases can save you money on your business tax return.
Tax Code Section 179 Deduction helps small businesses by allowing them to take the depreciation deduction in one year, rather than depreciating(expensing) them over a longer period of time. There is typically a benefit to taking the full deduction for the cost of the item immediately, rather than spreading out over time. Here are the steps.
1) You purchase or finance/lease the equipment or software
2) Sit down with your tax professional at tax time. You will need records on date of purchase, date, you started using the property, and all costs associated with the purchase (like freight and setup).
3) You add up all the items of property that are qualified.
4) Take the 179 deduction by electing it.
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