A simple deduction under section 179 can go a long way in helping you save money.
How Does Section 179 Help You To Save Taxes?
If you are doing business, you can save a lot of money under section 179 of the Internal Revenue Code. Under this section, you can immediately deduct the cost of property that has been purchased by you but used for your business. Under section 179, you can claim deductions for business equipment, office furniture, and other machinery that is used in business. However, there is a catch. If you are using these assets in connection with rental real estate, you will not be able to claim deductions under section 179.
You need to use these assets for more than fifty percent business use if you want to claim the advantages of deductions under section 179. If you are utilizing these assets for more than fifty percent but less than one hundred percent, you will be granted deductions for only the percentage used. You just need to make an election on Form 4562.
This kind of deduction reduces the amount of taxable income and thus lowers the income tax amount you’ll need to pay. If you are self-employed, this deduction is also effective in reducing your self-employment tax. Vehicles that are purchases and used for the purpose of business can also claim the deduction, though it has a limit. If you are claiming a deduction under section 179, it enhances the deduction for depreciation that you would have to claim over a number of years.
Don’t overlook this way to save on taxes. Just by utilizing a simple clause under section 179, you can easily save a lot of money. If you’re not sure how to benefit from this deduction, you should check with an effective tax consultant who will help you wade through the dilemma.