When we hear the words IRS and tax deductible, most people cringe. We instinctively prepare ourselves to be confused and overwhelmed with complicated rules.
Actually, the Section 179 Deduction that allows you to deduct business purchases (like medical equipment) isn’t so complicated.
Section179.org, a website that’s dedicated to making it easier to understand, explains it this way:
“Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the US government to encourage businesses to buy equipment and invest in themselves.”
The 2018 deduction limit is one million dollars, and the spending cap on equipment purchases is two million five hundred thousand with a bonus deduction of one hundred percent.
The Section 179 Deduction — An Example
Let’s use an example to make that easier to understand: If you purchase equipment for $100,000, and your Section 179 Deduction is also $100,000, and providing the tax rate is 21%, your cash savings would be $21,000. That leaves you with a total equipment cost (after savings) of $79,000.
The Section 179 Deduction — What Equipment Qualifies?
When talking about the Section 179 tax break, people often wonder what kinds of items are included.
Section179.org comes to the rescue again:
“Section 179 was designed with businesses in mind. That’s why almost all types of “business equipment” that your company buys or finances will qualify for the Section 179 Deduction.
“All businesses need equipment on an ongoing basis, be it machinery, computers, software, office furniture, vehicles, or other tangible goods. It’s very likely that your business will purchase many of these goods during the year and will do so again and again. Section 179 is designed to make purchasing/leasing that equipment during this calendar year financially attractive.”
In other words, most of the equipment a medical facility would purchase qualifies for this deduction.
Does the Section 179 Deduction Include Upgrades?
Yes, the deduction would include upgrades to your current equipment, as well as to the purchase of new equipment for the entire practice — Section 179 was designed to help.
One important note: To qualify for the Section 179 Deduction, all equipment must be purchased and put into place between January 1st and December 31st of the tax year for which you will be claiming the deduction.
The Section 179 Deduction Creates Opportunities for Your Practice
This is a great way to upgrade your practice and save money in the process.
If you were on the fence about buying new equipment because you didn’t know if you could afford it, the Section 179 Deduction can save your practice extra money at the end of the year while helping you ensure your practice is up to date with the newest technology.
Southwest X-ray works with several different lenders who can assist in your purchasing needs. Let one of our sales team members assist you in capitalizing on this opportunity provided by the Section 179 Deduction to save money — contact us here to learn more.