There are several different options when it comes to filling taxes, especially when it comes to a small to medium sized businesses. While the government has, in the past, provided tax incentives in the form of tax credits to make your business more energy efficient, there was not really the option to use other tax deductions to buy the equipment necessary to make this happen. This all changed with the IRS section 179 Deduction in 2012 that provided significant increases in the limits small business owners had to work with.
What is the IRS Section 179 Deduction All About?
The IRS section 179 Deduction in 2012 or other years allows for the purchase of specific types of equipment, assets or capital expenditures to be taken in the first year after purchase. This means that the business can obtain the full tax credit in that first tax filing rather than having to depreciate it out over years with only a small benefit to their taxes.
According to the IRS the actual business property that would qualify for this type of deductions is “tangible, depreciable, personal property which is acquired for use in the active conduct of a trade or business.” It also has to be made in the same year as the purchase and cannot be carried forward.
In 2010 this was changed to include qualified real property. The business owner, on qualifying property can choose to either file under the Section 179 deduction or use depreciation.
The Limit for an IRS section 179 Deduction 2012
The IRS section 179 Deduction in 2012 was $500,000, as it was from 2010 to 2013. After 2013 the limitation is $25,000. The total deduction claimed cannot be more than the income that the business generated for that tax year.
There is also another program, known as Bonus Depreciation, which is available to a business that has spent more than $560,000 on eligible purchases in the respective tax year. This is commonly only an option for very large businesses.
The IRS section 179 Deduction in 2012 and going forward can provide s significant deduction for a small business. This return can then be further invested in the business for additional possible tax options and improvements, adding to future savings and increased deductions the next year.
