Section 179 Depreciation Update Mark J Kohler Tax & Legal Tip

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“Mark kohler. Here with a quick tax and legal tip. Let s talk about depreciation depreciation and the 179 deduction. Now a lot of small business owners don t realize important this tax deduction is the last few years the ability to write off your equipment or a new truck or vehicle has been a disaster the deductions been all over the place and that s what this 179 thing is about essentially the 179 deduction is the ability to depreciate a piece of equipment faster and the year.

You purchase it a big ride off right off the purchase price now you re not getting a deduction or a bonus or some sort of credit. It s just the ability instead of writing something off over seven years you get to write off a big piece upfront. That s how the 179 deduction came about is to help us all go out and buy more stuff. A typical american thing to do right in the last few years its battles between one hundred and twenty five thousand or five hundred thousand or twenty five thousand.

It has been a guessing game for small business owners on december 18th 2015. Congress got together and passed the new law..

The protecting americans from tax hikes act or path. Now under this new law they finally cleared up all this confusion and made the 179 depreciation deduction permanent. Now you can deduct up to five hundred thousand dollars in the year of acquisition against the purchase price of new equipment or a qualifying vehicle. Now that could be a new car to you or use to someone else.

It s fine you can even do finance. This is a big deal let s talk about equipment first a lot of small business owners need to go out and acquire new equipment every year. And why ride it off over five ten fifteen years. Let s write it off right away the 179 comes in and you could go out and get better tax savings by purchasing a piece of equipment and riding it off faster.

However. The average small business owner loves to use this around the vehicle or suv..

Or big truck. And that s where you can deduct up to twenty five thousand dollars. If it s an suv or truck that weighs more than six thousand pounds. But it has a shorter truck bed than six feet.

If you have a truck that weighs more than six thousand pounds six foot better of greater or a. Passenger van or even an rv you can deduct up to the 500000. And taking into account the business use percentage you get to write off an amount depending on your situation now the last piece i want to add to this is bonus depreciation now bonus depreciation allows you to deduct up to fifty percent of a qualifying purchase in the first year. The fifty percent bonus depreciation allowance is through 2017 when you get to 2018.

It goes to forty percent in 2019. It goes to thirty percent..

Now in summary. You can see that there s a little bit of complexity here a lot of numbers and moving parts. But here s the bottom line you want to buy a big truck you want to buy a car you re looking to buy equipment you want to talk to your accountant and see if you can get a deduction in for your business at the end of the year or any time during the year where it makes sense for you now i always tell clients don t chase bad expenses with good money. If you don t need to buy something don t buy it but if you need that piece of equipment or vehicle in your business.

But 179 depreciation deduction is extremely powerful and can help you better live that american dream and take your business to the next level. Thanks for listening. And i hope that information is helpful and let me speak from the heart here. I ve been talking about topics like this for 10 15 years.

I m a cpa attorney best selling author radio show host and i am passionate about helping small business owners. Save taxes build wealth and protect it please check out the link right here download my free ebook on 10..

Common mistakes. Small business owners make into tax and legal arena. Also check out my social media links here. I ve got daily tips.

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