Ready for the 2018 tax season?
Here’s why you should start thinking about filing now.
Section 179 of the IRS tax code outlines tax deductions, which now allows businesses to deduct the full purchase price of qualifying equipment bought or financed during the tax year. Translation: if you buy or lease a piece of equipment that meets government guidelines, you can deduct the entire cost from your gross income on your taxes. It’s an incentive created by the U.S. Government to encourage businesses to buy equipment (machines, software, etc.) and invest in themselves.
In past years, when businesses bought qualifying equipment, they generally wrote the purchase off gradually, through depreciation. For example, if a company spent $100,000 on a machine, it could write off $25,000 a year for four years (this is a hypothetical example).
This year, with the passage of House Resolution one on Dec. 20, 2017, the deduction limit for Section 179 has doubled from $500,000 in 2017 to $1 million for 2018. What does this mean for you? Simply put, as a member of a rural community, you’re going to love this increase. Why? Because the taxes you save with the deduction will almost always exceed your cash outlay for the year, according to the official Section 179 website. Under the revised code, you can upgrade equipment and free up working capital in the process.
Exploring your options now might be the most profitable decision you make this year, and by taking the time to prepare for tax season and plan for year-end equipment purchases, you’ll make sure you get the most out of the hard work you do year-round. If you’re evaluating your year-end equipment purchase, the experts at The Bank of Gillette can work with you to weigh your options and decide on the best course of action.