It’s been an unbelieveably hectic week. Not only have we been finalizing Christmas preparations, but we’ve also been dealing with the fallout of a ruptured pipe at my mom’s house, which brought down the ceiling in the kitchen and flooded the entire house. As a result, the kitchen, which was completely remodeled less than 2 years ago, has been demolished to the wall supports. Carpets and flooring have come out as have sizeable sections of drywall. We’re in for a MAJOR remodel!
Jean Marie has been at the house everyday and working with Five Star Restoration & Construction Company on getting everything dried out and ready for the next step in the process. She advises they’ve been absolutely fantastic and, should the need arise (fingers crossed it won’t!), wouldn’t hesitate to use them again. Check out the pictures and use them as a reminder of the importance of taking action to protect yourself from, or better yet prevent, unforseen events!
Today’s article deals with reducing taxes by deducting some personal item purchases used for business. If you’ve made some substantial purchases this year, you may be able to take advantage of the considerable deduction limit for 2013. And while the deduction limit will be drastically reduced next year, qualifying purchases will still reduce taxes and thus impact your business’ bottom line.
Wishing you Health, Happiness and a life filled with Passion!
Last Chance to Take Advantage of Large Section 179 Deduction
Section 179 of the tax code is provides a great opportunity for small business owners to save on their taxes by allowing you to deduct in one year the cost of any new or used personal property that you purchase and use in your business more than 50% of the time.
Some of the items that qualify for Section 179 expensing include computers, office furniture, business equipment, machinery and even computer software. Items that are not allowed are leased equipment, land, inventory, property that is used outside the U.S., intellectual property, buildings and heating/air conditioning units.
To qualify for the Section 179 deduction, the items must be used at least 51% of the time for business purposes. You also have to use the items in the year they are purchased. In other words, you can’t take a deduction on personal property you already own that you convert to business use.
An alternative to Section 179 expensing is bonus depreciation, which you can use to deduct the cost of business property over the number of years that it is in use. For 2013, the bonus depreciation rate is set at 50%, which means you can deduct half the cost of business property acquired this year for your 2013 return. Unlike Section 179 expensing, bonus depreciation does not require the property to be used more than 50% of the time and there is no dollar limit attached.
Section 179 is not going away, but the annual deduction limit is going from $500,00 this year to $25,000 in 2014, so this will be your last opportunity to take advantage of a large Section 179 deduction.
Year-end tax planning (NOW) is one of the most important things you can do to save big money on your biggest expense. While it may be too late for this year, it’s not too late to get started building the relationships with us and your entire LIFT team for next year. Our work with you in this arena will save you far more than it costs.
Call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. We can help you implement last minute tax strategies for 2013 and help you plan for 2014 with advanced business asset protection tactics.