How Section 179 Can Help Your Business Save Big on Tech This Tax Season
For many businesses, tax season can be the most stressful time of the year. But here’s some good news: technology tax deductions, like Section 179, can help ease the burden. Not only can this deduction save your business money, but it can also help you grow by making it easier to invest in the tech you need.
The Section 179 tax deduction allows businesses to deduct the full purchase price of qualifying equipment or software bought, financed, or leased during the tax year from their gross income. This is especially great for small businesses, helping them stay competitive while reducing expenses.
Let’s dive into how you can take advantage of Section 179 before the year ends.
1. What Products Qualify?
Luckily, most tangible goods used by American businesses qualify for these tech tax deductions. Here are a few examples:
- Purchased, financed, or leased equipment
- Workstations, laptops, tablets, or smartphones
- Servers, printers, routers, and network security appliances
- Off-the-shelf software
You don’t have to wait until the end of the year to invest in new equipment. You can make the purchases you need anytime and still take advantage of the deduction provided by the U.S. government.
2. Are There Any Limitations?
While Section 179 is a great opportunity, it does come with a few limitations. First, the qualifying equipment and software must have been purchased, financed, or leased between January 1st, 2022, and December 31st, 2022.
Secondly, the items need to be used for business purposes more than 50% of the time. To figure out how much you can deduct, just multiply the cost of the product by the percentage it’s used for business.
Lastly, the amount you can deduct for 2022 is capped at $1,080,000, and the total amount of equipment purchased has to be $2,700,000 or less to qualify. After you hit that limit, the deduction starts to phase out, decreasing dollar for dollar.
3. How Can You Get Started?
Once you know what products you can deduct within your limit, it’s time to get the process started. When you’re filing your taxes, use Part 1 of Form 4562 to claim your deduction. You’ll list the qualifying products and their costs, up to the deduction limit.
Take the Next Step
With technology tax deductions like Section 179, you can invest in the latest tech while maximizing your savings. Plus, using cutting-edge technology can help your business become more efficient, productive, and future-ready.
Want to know which tech could benefit your business and qualify for year-end savings? Our IT experts are here to help. We’ll make sure you don’t miss out on savings and that you’re equipped with the best tools out there.
For more insights on IT tools and strategies, check out our other blogs in the resources section.
Disclaimer: The information provided in this blog is for educational purposes only. Consult your tax professional for advice on how Section 179 may relate to your business.