The U.S. Government has again approved the Section 179 of the United States Internal Code that allows businesses to save money by speeding up the process of writing off the value of the new and USED equipment purchased in 2014. In 2014 there are a few differences that varies from the previous years that you should be aware of.
What is the Section 179?
The Section 179 is the U.S. Government incentive to support the businesses by allowing them to deduct the full purchase price of the new but also used machines, vehicles or software from their gross income. Section 179 of the Internal Revenue Service Tax code was created to support mainly small businesses because the tax deduction will make it much easier for them to invest by purchasing new or used equipment and have the opportunity to expand their businesses.
How it works in 2014?
There are few changes in the 2014 rules that should be highlighted. The 2014 deduction limit was set to $25,000 when the limit on equipment purchases is $200,000. This amount is the maximum that can be spent on the equipment that qualifies for Section 179 during the year 2014 in order to benefit from this tax relief in full. When the total amount is higher, then it phases out on a dollar-for-dollar basis. So if you exceed by for instance $10,000 then your dollar limit decreases by $10,000 (not $25,000 anymore but $15,000 now). To quickly sum up how this works, normally it takes quite a long time to write off the purchased equipment through the depreciation. Section 179 helps to write off the entire amount at once in the year of purchase (if the price is in the limits). But do not forget, the machines need to be bought and put into production by 12/31/2014!