Section 179 writeoffs benefit businesses

  • Tue Dec 13th, 2011 10:46am

By Julie Rice IntegrIT Network Solutions

If you’ve been contemplating a software or hardware purchase, there is no better time than now to take action. Congress has extended IRS Section 179 to cover the 2011 tax year.

This means, businesses are allowed to deduct the full purchase price of qualifying equipment (including software and hardware) purchased or financed during the tax year instead of being amortized over several years. In 2011, the amount you can write off has gone up to $500,000 (from $250,000 in 2010) and the total amount of equipment that can be purchased increased to $2 million. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

In other words, now is the perfect time to purchase the hardware and software your company will need in 2012 and beyond. But do it now because the Section 179 provision is scheduled to expire at the end of 2011.

Here’s how it works. Let’s say you’re thinking of buying $10,000 of computer equipment by Dec. 31. If your business is taxed at 35 percent, then your new computer equipment will effectively cost only $6,500. These purchases could include software, servers, desktops, laptops, printers, routers, firewalls and even current hardware leases you may be paying.

If you’ve been thinking about adding equipment or software, but just haven’t been able to pull the trigger, work with a qualified IT Consultant to find out which products will benefit your business the most. At IntegrIT Network Solutions, we are happy to make recommendations about how to add new equipment to your office and gain a tax write-off.

Working with an accountant who is familiar with your situation is the best way to make your buying decision on the Section 179 information provided here. Your accountant should be able to look at your year-to-date profit and loss statement and determine if the deduction is in your company’s best interest, from not only an income tax perspective but cash flow also.

For more information about Section 179 and recent legislative changes and extensions to the tax code, go to www.section179.org or this IRS web page.

Julie Rice is vice president of business development at IntegrIT Network Solutions in Lynnwood. Go to www.integrit-network.com or call 425-787-0193.