www.taxprofessionals.com - TaxProfessionals.com
Posted by Financial Business Solutions

What Qualifies for 179 Expensing Business Equipment?

What Qualifies for 179 Expensing Business Equipment?

When it comes to running your business properly, you will want to make sure that you are able to save as much as possible. Your business is a way to make you money, but in between paying for employees, buying new equipment, and keeping the business running, it may feel like money is always running out of the business rather than coming in. Luckily, once you learn about the section 179 expensing business equipment option and you use it on your tax return, you can save money on your biggest expenses, namely business equipment, so you can use this money on other things. If you are interested in learning more about this deduction or applying it on your tax return this year, make sure to contact Financial Business Solutions to get started.

What  is Section 179?

Many business owners are uncertain of how the Section 179 is going to be able to help them. While it isn’t able to increase how much you are able to deduct from your income each year, it is going to allow you to get the depreciation value of your new equipment all in one year rather than having to spread it out over the useful life of your asset; in some cases, this useful life can be 39 years. It is also known as first year expensing so you can get the money back right away rather than having to drag it out over a long time.

In the past, you would have to take the total cost of your new asset and spread it out over a certain amount of time, usually five years. But with the new rules, you can do this all at once, deducting the full amount of an asset all at once. This can help you as a business owner to get the money back right away and saves a lot of headaches at tax time.

Tangible  Personal Property

There are several types of property that you are able to use for this deduction and it doesn’t matter if the property is used or new. The property just needs to last for more than a year to count. Some of the things that you can deduct for this kind of expensing includes office furniture, equipment for the office, computers, computer software, and more. There are several things that you can’t count as tangible property including:

  • Heating and air conditioning costs
  • Any property that you use that is outside the United States
  • Intangible property including trademarks, copyrights, and patents
  • Inventory
  • Structures that are attached to your land such as parking areas, extra buildings, swimming pools, and fences
  • Land.

If you are uncertain about whether you can claim some of your property under section 179, make sure to contact the professionals at Financial Business Solutions to get started.

Property  used Mostly for Business

Even if you are able to claim some of the items above, you need to make sure that they are being used properly. In most cases, you need to use the item above primarily for your business. Using it a few times for personal use is not that bad, but at least 51 percent of the use needs to be just for business. For example, if you have a business computer but used it once on vacation to post some pictures, you can still deduct this expense under section 179. On the other hand, if you have a personal computer that you just sent a few emails from one day, you will not be able to claim this.

Any of the property discussed above can work as both business and primary use, but you need to make sure that you are using it most of the time for your business. If you start using the piece of equipment more for personal use rather than business, you should not claim this under section 179. If you are uncertain about whether you should claim the item because you do use it a lot for personal use, make sure you contact the professionals at Financial Business Solutions to help you determine where this property falls.

Property  You Purchase

If you purchase a building or other property for your business, you can use section 179 to deduct this item. You do need to be careful though. If you are leasing the property or you inherited the property from someone else, you will not be able to claim it under this deduction. This is an important distinction that most people aren’t sure about and it can make a huge difference on your tax return. You also won’t be able to claim section 179 if you purchase the building from one of your relatives or from another company that you have some control over.

If you are about to purchase a building and are uncertain of whether it is going to qualify under section 179, make sure to contact the professionals at Financial Business Solutions. We can help you take the right steps to ensure that the purchase of the building will be able to fit with section 179 so you can get this valuable deduction.

If you run a business and want to make sure that you are doing this expensing process properly, you should bring in the professionals. Erica Hoxie at Financial Business Solutions in Hayward, CA has the experience and knowledge to make sure that you are expensing out your business equipment properly so you can get your biggest refund possible. Contact us to get started today!


Financial Business Solutions
Contact Member