Section 179 is a tax deduction that brings significant tax savings for small businesses. It does not increase the total amount the small business owners can deduct, but it allows them to take their entire depreciation deduction in one year, rather than taking it a little at a time over the term of an asset’s useful life….which can be up to 39 years in some cases. This is called “first-year expensing” or “Section 179” expensing.
First, you need to know which of your flexo equipment is qualified for this deduction.
- New and Used Equipment
- Business Vehicles with a gross vehicle weight in excess of 6,000 pounds
Beyond the machinery in the print room, it’s good to know that the software and computers that help with the digital workflow are covered as well.WHat
ANNUAL DEDUCTION LIMIT:
There is hope that before year-end, Congress will reinstate the tax incentives we had in prior years, but for now….Section 179 allows you to write off up to $25,000 of flexo equipment purchase and installed in 2014. You must reduce your Section 179 deduction by one dollar for every dollar your annual purchases exceed the applicable limit which is $200,000 for 2014 (unless the 2014 limits are increased).
You cannot use Section 179 to deduct more than your net taxable business income for the year. If you have a net loss for the year, you cannot take the Section 179 deduction for that year. If your net taxable income is less than the cost of the property you wish to deduct under Section 179, your deduction for the year is limited to the amount of your income. Any amount you cannot deduct in the current year, you can carry forward and deduct the next year (or any other year in the future).
Consult with your CPA or Tax Advisor to see how Section 179 can help your company acquire the flexo equipment needed and save pre-tax dollars.