Entrepreneurs are running out of time to save money through a tax deduction that may be slashed if the Capitol Hill collective can’t act quickly enough to salvage the heart and soul of the American economy.
The tax deduction that can save small-business owners big sums of money is the Section 179 deduction of the U.S. IRS Tax Code. It is used for writing off small-business equipment purchases made through financing or leasing options. But entrepreneurs need to understand there is limited time to act on the deduction. If money means anything to you as an entrepreneur – and in all likelihood it means everything – follow these how-to steps provided by Income.com to take full advantage of the Section 179 deduction before the government takes advantage of you:
Use equipment during the tax year
Verifying that equipment purchased through financing or leasing is used in a certain time frame may seem like a banal task. But listen up, entrepreneurs, because you risk missing the chance to put money back in your pocket if you glaze over this step.
To qualify for the deduction, equipment must be used in tax year 2012, between January 1, 2012, and December 31, 2012. Canvas your records and double-check your dates of purchase and implementation for equipment to ensure you are in a position to use the deduction before it’s too late.
Write off as much as you can, while you can
Currently, entrepreneurs can deduct up to $139,000 in equipment purchases, as long as the total for the year does not exceed $560,000. That’s a lot of money that can come back to you and your small business. You would do a disservice to yourself and your enterprise if you don’t wring every last penny from the deduction as it stands before the government takes the Section 179 to the cleaners.
The parameters of the current deduction will expire next year without action on a fiscal cliff compromise. The total that small-business owners will be able to write off would then be reduced to just $25,000. Entrepreneurs need to act with urgency, unless they want to have the rug pulled out from under them.
Leave no stone unturned
Review every last thing you can put toward the deduction. Some of the common equipment items that are covered include: equipment purchases for business use, tangible personal property used in business, business vehicles that weigh more than 6,000 pounds, office furniture and office equipment.
If the purchase falls remotely under the acceptable guidelines for equipment write-off, use it. Don’t bother nit-picking; the deduction is all about saving entrepreneurs the most money possible.
Acting on the Section 179 deduction is of the utmost importance for small-business owners. Not taking a stand will further embolden the government to indiscriminately cut away at tax-related ways to support small businesses. Make sure your equipment was used within the year, get your money’s worth out of the deduction, and, if the equipment is covered, use it! This may be the last year entrepreneurs can use the deduction to such an extent, so act now.