Think of the routine of a business trip. You expense everything—your airfare, accommodations, meals, and cab fare—to your employer, right? (Right.) As it turns out, you can expense some standard business costs to Uncle Sam, too. Under Section 179 of the Internal Revenue Service code (“Election to expense certain depreciable business assets”), you can file for deductions on electronics purchases that are critical to your business (or, as the government defines it, help you generate income). Self-employed workers might think this law is reserved for enterprises or even SMBs. But in fact, you don’t even need to be registered as a business to take advantage of this tax code. You can even deduct tech purchases that live in your home office. Glenn Eisenbruch, a Long Island–based CPA, walked us through the rules. All you need to get started is the tech equipment you purchased within the past year, and each one’s use for business purposes. "As long as it is used in a trade or business, it would qualify,” Eisenbruch said. Do You Qualify?
- In addition to computers and vital software, the code covers other office equipment and electronics, large vehicles, and even furniture.
- The code does not apply to business real estate and leases.
- The code also does not apply to equipment used outside the United States.
- An estate or trust may not claim this deduction.
- You may take advantage of this code if you lease equipment.
- You must deduct a business item the year you place it into service.
- The maximum dollar amount for 2008 is $250,000; for 2009, $133,000.
- Your Sec. 179 deductions may not exceed your taxable income. If it does, however, you can carry over the surplus.
Filing Your Taxes
- You must use Form 4562 (“Depreciation and Amortization”) to take advantage of Section 179.
- Follow the instructions, consult an accountant, or use tax software to calculate the depreciated value of your business equipment. Section179.org also has a free tool to help you do this. http://www.section179.org/section_179_calculator.html
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