The Section 179 IRS code is here to help stimulate our economy and give practices of all sizes the opportunity to deduct the full price of qualifying equipment and/or software acquired during the tax year.
This deduction offers a solution towards purchasing multiple items of equipment or software in the same year more palatable - which is the point of Section 179: to motivate the American economy to move in a positive direction.
What is the Section 179 Deduction?
The (1)Section 179 Deduction allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the 2019 tax year: January 1st through the end of the day on December 31st. That means you if you buy or lease a piece of qualifying equipment, you can deduct the full purchase price from your gross income.
Instead of the usual practice of writing items of equipment off little by little say a $50,000 machine getting written off for $10,000 each year over the course of five years, you can write off the entire equipment purchase the year the item is bought. Most practices prefer to include the item in a single fiscal year.
What qualifies as a deductible piece of equipment or software?
Section 179 is aimed at general business equipment as well as off-the-shelf software.This includes machines, computers, office furniture, and more. Along with that, a popular use for Section 179 has been for towards company (2)vehicles:
"Vehicles used in your businesses qualify – but certain passenger vehicles have a total deduction limitation of $11,160, while other vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes qualify for full Section 179 deduction"
Be sure to check out the more thorough list of (3)qualifying property.
How does this help my practice financially?
By deducting the full cost of your medical equipment or software, including electronic medical records and/or practice management software, you lower the overall amount you must pay substantially. The deduction you take may exceed the total loan or lease payments you make for the year, making your deduction process a more financially beneficial move.
What is the deduction limit for Section 179 Deductions?
The value varies by year - But for 2019, the limits are as follows:
2019 Cap on Equipment Written off = $1,000,000
This deduction applies to new and used equipment, as well as off-the-shelf software. In order to take the deduction for the 2019 tax year.
2019 Limit on total Amount of Equipment Purchased = $2,500,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your practice begins to be reduced on a dollar-for-dollar basis.
Bonus Depreciation: 100% for 2019
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. It’s important to note that Bonus Depreciation for 2019 is available for new and used equipment.
How do I use the Section 179 Deduction?
All you and your practice need to do is buy or lease the equipment, and use the corresponding IRS form.
This deduction was designed with small businesses in mind, and its benefits can help reduce the stress you may feel towards investing in equipment, software, and other valuable items your practice needs.
Make sure to get those deduction in as soon as possible! This write-off ends on December 31st.
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