Section 179 Deduction 2013 - The Ultimate Guide

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In today's presentation we are going to take a close look to one the biggest deduction available to businesses, The Section 179. So lets get started!

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Section 179 Deduction 2013 - The Ultimate Guide

  1. 1. Section 179 Deduction 2013 The Ultimate Guide by FitSmallBusiness.com
  2. 2. The Section 179 deduction
  3. 3. The Section 179 deduction is one the biggest deduction available to businesses.
  4. 4. It is often referred to as the “SUV tax loophole” OR “Hummer deduction” for its ability to get a bigger deduction for these types of vehicles.
  5. 5. The “179 deduction”, refers to Section 179 of the IRS tax code. This deduction offers business owners to deduct up to $500,000 of qualifying purchases.
  6. 6. Think of the 179 deduction as accelerated depreciation.
  7. 7. Instead of waiting, 5, 7, 15 years to slowly deduct your equipment, material or improvement costs you can elect to depreciate most, or all, of it in the current year.
  8. 8. To slowly deduct your equipment, material or improvement costs you can elect to depreciate most, or all, of it in the current year.
  9. 9. What Qualifies?
  10. 10. Qualifiers for these deductions: • Vehicles • Storage facilities and some types • • of structures. Machinery Equipment Livestock
  11. 11. In the 2013 tax year, computer software bought off the shelf may also be deducted. The IRS calls such property “tangible” property, meaning that it is actual property that exists in a material form.
  12. 12. One of the main requirements is that all the property must be used in business. At least 50% of the time, and be purchased in the current tax year.
  13. 13. Vehicles are also eligible for a substantial deduction. However, if you use your car, for personal reasons also, you may deduct only the business percentage.
  14. 14. If you use your computer for personal and business use, the usage is based on hours. You would calculate the percentage of hours you use it for work-related purposes, and divide by the amount of time you use it for personal reasons
  15. 15. Reasons to take the 179 Deduction
  16. 16. In a year, when business expenditures are high, large tax savings can help with cash flow, lower costs, and help your business expand.
  17. 17. Because you deduct the entire amount of your purchase in the year you acquired it, you cannot keep depreciating the items in. subsequent years.
  18. 18. A business should carefully consider:
  19. 19. • The future deductions
  20. 20. • Expected cash flow
  21. 21. • Whether this deduction would be beneficial.
  22. 22. Section 179 Deduction
  23. 23. Section 179 Deduction Limits
  24. 24. For 2013 the deduction limit For The Section 179 is $500,000.
  25. 25. For 2013 the deduction limit For The Section 179 is $500,000. Real property is limited to $250,000 of that limit.
  26. 26. Additionally you can deduct part or all of the cost of equipment.
  27. 27. If you bought a saw for $10,000, you can deduct the full amount or part.
  28. 28. If you bought a saw for $10,000, you can deduct the full amount or part. If you used $5,000 as a 179 deduction, the remaining $5,000 could be depreciated.
  29. 29. The dollar limit
  30. 30. The dollar limit is subject to limits in the following circumstances:
  31. 31. Any 179 property amount over $2,000,000 is subject to a reduction, which is reduced dollar for dollar.
  32. 32. Qualified Business Enterprise Zones Qualify for an increase of $35,000. If costs exceed $2,000,000 the increase is half the qualified zone property cost.
  33. 33. Sport Utility Vehicles have a limit of $25,000.
  34. 34. Disaster Assistance property
  35. 35. Disaster Assistance property is increased by the smaller of $100,000 or the cost of the qualified section 179 Disaster Assistance property placed in service during the tax year.
  36. 36. Filing status also has an effect on limits. Married Filing Jointly taxpayers are treated as one taxpayer in determining any reduction to the dollar limit, regardless of who purchased the property.
  37. 37. The Section 179 deduction is beneficial for many small businesses, and can impact many purchases and decisions.
  38. 38. And Finally...
  39. 39. To learn how to simplify the process of running your business visit us at....
  40. 40. www.FitsmallBusiness.com Thanks for watching Click here to tweet this presentation.

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