When it comes to tax planning, the end of the year is a key time to take advantage of deductions and credits that can save you money. One such deduction that many business owners may not be aware of is the Section 179 of the IRS tax code deduction for equipment purchases.
Here are three reasons why buying equipment before the end of the year can be a smart tax move:
1. You can write off the entire purchase price when you file your taxes.
2. The depreciation on the equipment will help reduce your taxable income each year.
3. You’ll get to use the equipment for a full year before it’s considered “used” and you have to start depreciating it.
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“If you have the ability to pre-pay expenses that can be deducted from your business income, then do so! Buy that equipment, lease a vehicle, prepay your advertising expenses for the first quarter of next year, give your employees their year-end bonus before December 31st.”
When you purchase qualifying equipment before December 31st, this deduction advantage allows businesses to deduct the entire cost of the equipment from their taxable income for that year. This could provide a significant tax savings, especially if your business is in a high tax bracket. For example, if your company is in the 35% tax bracket, and you buy $10,000 worth of qualifying equipment, you’ll save $3,500 in taxes.
There are some restrictions on what types of equipment qualify for this deduction. The most common restriction is that the equipment must be used primarily for business purposes. So if you’re thinking about purchasing a new car to use for personal transportation as well as business purposes, it won’t qualify. However, if you’ve been considering purchasing a new equipment trailer to improve the hauling and delivering capabilities for your business, like a HAULIT Trailer, it would definitely qualify!
If you’re in need of new equipment for your business or ready to expand your capacities, now is the time to buy!
Contact us today to learn more about the tax advantages of buying equipment before December 31st.
See our USED TRAILERS for sale!