Let’s face it, when it comes down to doing taxes, we all want to take advantage of as many tax breaks as we can. Businesses are not exempt from this way of thinking. For this reason, it’s important for you to be aware of any potential deductions that may be available to you. Fortunately, the purchase of office equipment for your workplace can bring with it some much-needed tax breaks. Let’s take a quick look at how this works.
An overview of depreciation
According to the IRS, depreciation is an income tax deduction that allows taxpayers to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of tangible property such as machinery, furniture, and equipment. In other words, when you purchase these items for your office, it is not accounted for as an expense in that one particular year. Instead, the expense is spread out over the life of that item. Any piece of equipment that is valued at over $2,500 becomes a depreciable asset, and you must depreciate these assets.
Each item has a different ‘useful life’, and therefore, the calculation of depreciation will vary with each device. There are also different methods that can be used to calculate depreciation, such as straight-line, accelerated, or Section 179 expense deduction (more on that below).
50 percent Bonus Depreciation
This is an import guideline to be aware of during tax time. All businesses can depreciate 50 percent of the purchase price of equipment that was acquired and put to use in 2015, 2016, or 2017. The bonus depreciation will lower to 40 percent in 2018 and then down to 30 percent in 2019.
Section 179
This beneficial law allows businesses to purchase or lease equipment and deduct the complete purchase price during that same tax year. This law was created with business owners in mind, enabling them to participate in tax savings related to purchases at the end of the year.
Maximizing your business’s tax savings takes time and effort, and it helps to know the laws and limits that are associated with your office equipment. Of course, always be sure to rely on a knowledgeable tax professional to make sure you are in compliance with the current guidelines. To start taking advantage of these tax breaks by adding new office equipment to your organization, contact the professionals at Golden Gate Office Solutions.
