The Tax Cuts and Jobs Act, passed in November 2017, is the most comprehensive tax legislation passed in more than 20 years. The changes passed in the TCJA go into effect for the 2018 tax year, and Batley CPA, LLC wants your small business to be aware of changes- particularly changes made to the Section 179 deduction- that can help when filing small business taxes this season.
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment or software from gross income when filing small business taxes.
The deduction is designed to not only help, but encourage, business owners to invest in their own success.
Section 179 changes to keep in mind when filing small business taxes
- 2018 deduction limit now $1 million.
- 2018 bonus depreciation now 100 percent.
- 2018 total spending cap now $2.5 million.
In 2018, businesses will be allowed to take a first-year deduction on qualifying business equipment up to $1 million. This is up from $500,000 in the past.
New and used equipment bought or leased and placed into actionbefore December 31, 2018 qualifies for the deduction.
The new code also expanded the use of “bonus” depreciation- or first-year deductions for equipment expenses that don’t qualify for the deduction.
“Prior law allowed for a 50 percent bonus depreciation, but under the new tax code that has been increased to 100 percent in the year of acquisition,” says Brien Batley, founder and managing member of Batley CPA.
Most products, including software and business-use vehicles will qualify for Section 179 and, according to Batley, acting by year-end, may allow businesses to lock in substantial depreciation deductions when filing small business taxes for 2018.
Call Batley CPA today to make sure your business is taking advantage of the new tax code and the changes to the Section 179 deduction when filing small business taxes.
About Batley CPA
Batley CPA, LLC is a full-service CPA firm providing tax, accounting, payroll and advisory services to businesses and individuals throughout Green Bay and the Fox Cities. Batley CPA regularly provides clients with best practices and strategies to maximize cash flow, profit, reduce taxes, manage costs and risk, and bring meaning to financial and operational data. The company has offices in Appleton, Neenah and Green Bay.
View original article on filing small business taxes here.