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1040 Over and Out

We brought this up before, and we believe it’s worth talking about again. Tax deductions for business expenses are always available, but there is at least one special deduction you may be able to use if you act before the end of the year. It’s Section 179 of the Tax Code.

Section 179 lets you claim a full deduction of the price you pay for new and used computer hardware and off-the-shelf software purchased or leased and put in service between Jan. 1, and Dec. 31, 2013. That gives you two weeks to place your orders.

Off-the-shelf software is software available for purchase by the general public – not custom-written. Most commonly used software for small and mid-size businesses is off-the-shelf, so this provision of the Tax Code should cover just about any programs and applications you use.

As we pointed out earlier, the value of all qualified purchases and leases is limited to $500,000, but a good shopper or a good shopping helper can help you maximize the value of your qualified purchases. Just remember that you must use those purchases for business at least 50% of the time.

If you will not make a profit in 2013 and will not pay taxes (this is separate from not filing a tax return), you can carry forward a 50% deduction to a year when you will have a profit and pay taxes.

You should check with your tax advisor to make sure you apply the provisions of Section 179 correctly. In fact, your tax advisor could find more benefits for you depending on how your business is structured, the type of business equipment you use and your tax filing status.

Once you understand your financial situation and have your shopping list, we can help you find the best values and schedule your installations. Time is ticking away, so please don’t hesitate to call us (973-433-6676) or email us to beat the clock and get your tax breaks.

This article was published in Technology Update, the monthly newsletter from Sterling Rose LLC.