Pay a little + deduct a lot! = Section 179
What is IRS Section 179
This section of the tax code is all about the Tax Cuts and Jobs Act of 2017. It allows you to expense the full value of equipment assets, like a laser purchase, on your taxes within the same tax year that you made the purchase.Businesses can deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means if you buy a piece of qualifying equipment – and put it into service – before December 31st, your business can deduct the FULL PURCHASE PRICE from 2018’s gross income.
Any practice that purchases, finances, or leases new or used business equipment during the tax year should qualify for depreciation tax deductions. However, there are limitations on amounts, so we advise consulting with a tax advisor before taking advantage of a deduction. The IRS list of qualifying equipment is a long list and your therapeutic laser purchase should be on it (again, we recommend discussing this with your tax advisor) And as an added bonus in 2018, depreciation deductions can include qualified property (building) improvements as well-for example, that extra room you created for your laser and the influx of patients that come as a result!
Leasing & Tax Deductions
There is definitely a huge advantage to financing equipment and taking the Full Depreciation Tax Deduction. Section 179 means that, after purchasing equipment, your practice can deduct the total cost of the equipment, even if you have not paid the equipment off in full yet. The benefit in the amount of taxes saved can actually exceed annual monthly payments. And this is where Section 179 can really work for you, since the result should be a very bottom–line friendly deduction.
For a small practice working at managing cash flow, Section 179 leverages your equipment purchase. You can minimize out of pocket expense and take the full tax deductions.