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Tax – IRS 179

The economy is in dire straits, with pundits predicting it is barreling toward an inevitable recession. For most business owners, the prudent move is to save every coin. That’s where IRS Section 179 comes in handy. 

Shrewd businesspeople use Section 179 to purchase equipment and earn a tax benefit. This article elaborates on making good use of section 179 to your business’s full advantage. 

What is Tax IRS 179

The IRS, through Section 179, allows businesses to deduct the full purchase cost of a capital asset, be it equipment or software, in the first year of its purchase and use. 

That contrasts sharply with the usual way of depreciating an asset throughout its useful life. The only catch is that the capital asset must meet the qualification requirements of Section 179.

What is Section 179 Deduction

Section 179 deduction refers to the part of the internal revenue code that allows the deduction of the purchase cost of specific equipment categories per regular depreciation rules. 

Instead of taxpayers making deductions periodically over a certain period of years, it is an immediate expense deduction made in the same accounting period you bought the equipment or software. 

For instance, if you purchase an asset for $80,000 and it meets the threshold stipulated under Section 179, you can deduct the entire $80,000 from that year’s taxable income.

What qualifies for section 179?

The IRS intends for only small and mid-sized businesses to use Section 179. A wide range of hardware and software assets qualify for section 179 deduction. You must prove that you bought the equipment between January 1 and December 31 of a given year. 

Some of the capital assets that qualify include:

  • Computer software
  • Office furniture and equipment
  • Containers
  • Security systems
  • Trucks
  • Vans
  • Vehicles weighing at least 6000 pounds

The equipment can be new or used, provided you did not previously own it. Some office enhancements, such as security systems and HVAC, qualify as well. 

Note that for a piece of equipment to qualify under Section 179, it must not have cost more than $2 million. Businesses cannot declare tax deductions exceeding their net taxable income.

You can use the legal provision to expand your fleet of business vehicles. As managing such a large fleet of vehicles can be hectic, purchase a fleet management solution

Thankfully, fleet technology such as GPS devices and the software powering it qualify for tax deduction under Section 179. Fleet management solutions use accurate GPS tracking devices, helping you monitor drivers’ behavior, record travel progress, and ensure fleet safety.

How section 179 works

The capital asset must satisfy the following requirements:

  • Acquired: You must buy the equipment, not lease it. Most tangible equipment, like furniture, and business software, qualify. However, buildings and land do not. Finally, you must purchase it from an organization you have no relations.
  • Business oriented: Equipment used for personal use is not eligible unless you use more than 50% of it for business. 
  • Make use of the assets: Section 179 only kicks in when you start using the asset. For instance, if you purchase an asset in 2022 but start using it in 2023, you can only claim the tax deduction in 2023.

Buy the Safety Track Fleet Management Solution and Enjoy a Massive Tax Deduction

If you need fleet management technology, but its cost is off-putting, don’t worry about that. Thanks to Section 179, you can knock off the entire purchase cost from your taxable income. That means you will essentially enjoy the fleet management solution for free. 

Safety Track should be your go-to partner for cutting-edge fleet management technology, as our solutions enhance fleet management, improve driver behavior, and help maintain fleet safety. 

Contact us today to sign up for an exceptional fleet management solution and enjoy substantial tax deductions before year-end.