Cut Your Taxes in 2014: Don't Miss Out on Your 179 Deduction

Posted by Jack Craven on Thu , Dec 04 , 2014

The end of another year is quickly approaching, and it’s once again time to take the proper steps to reduce taxes on your personal and business returns. Tax planning strategies for 2014 includes accelerating deductions and deferring income.

reduce federal taxes

Section 179 of the IRS tax code makes it possible for businesses to deduct the full price of qualifying equipment or software purchased or financed during the tax year. If you buy or even lease qualifying equipment, you are allowed to deduct the full price from your gross income up to a maximum deduction of $25,000 in 2014.

All businesses that purchase, finance, or lease less than $200,000 in new or used business equipment during tax year 2014 qualify for the Section 179 Deduction. If you spend more than $200,000 the Section 179 deduction begins to be reduced. This works great  for the typical media entrepreneur.

 

Let’s say you purchased PCs (or Macs), telelephone equipment other business equipment,  here is an example that shows how Section 179 works:

Section 179 for 2014

Equipment purchased in 2014

$75,000

First year Section 179 write-off

$25,000

Normal First year Depreciation (20% in each of the years on remaining amount)

$1,000

Total 2014 Deduction

$35,000

Tax Savings assuming 35% tax bracket

$12,250

After tax Equipment Cost in 35% tax bracket

$62,750

Section 179 applies to virtually every type of  equipment you can buy. This includes passenger vehicles used 50% or more for business, however, there is are limitations. It also includes off-the-shelf software, qualified leasehold improvements and retail improvements.

There is one catch however, you need to place the property in service by December 31, 2014. 

 

 

 

 

 

Topics: tax deduction, IRS tax code, Section 179, cut your taxes