The 2022 tax season is almost here. Many businesses get nervous during this time, often wondering if they are taking advantage of tax deductions that can reduce their overall expenses. Luckily, technology tax deductions can help companies save big, including Section 179.
With the Section 179 tax deduction, businesses can deduct the full purchase price of qualifying equipment or software purchased or leased during the tax year. The only restrictions? Businesses must have purchased or leased the equipment between January 1st and December 31st of the tax year and have used the items more than 50% of the time for business purposes.
Let’s delve into the full benefits provided by Section 179.
1. Save Big Immediately
It’s a common theme — businesses purchase technological devices and wait for them to quit working before moving on to a new purchase. Doing so provides a plethora of issues, including slowed operations, decreased productivity and high costs to troubleshoot problems.
With the Section 179 tax code of technology tax deductions, businesses can instead invest in new technology at any time and write off the entire cost while filling out their taxes. There’s no need to wait for holiday sales at the end of the year to make an investment.
The following products qualify:
- Purchased, financed or leased equipment
- Workstations, laptops, tablets or smartphones
- Servers, printers, routers and network security appliances
- Off-the-shelf software
2. Remain Competitive
Technology is quick to evolve in today’s age. New hardware and software are released constantly, with cutting-edge features meant to help automate administrative processes and streamline operations.
By continuing to use outdated technology, you risk falling behind your competitors. They’ll be able to work more efficiently, productively and faster. On a broader scale, you risk losing customers to competitors, affecting your bottom line. You must keep up with technology to remain successful in a digital-first world.
3. Make Saving Easy
Another aspect of the tax season that stresses out businesses is how complicated they fear it will be. Fortunately, that’s not the case with Section 179. To take advantage of technology tax deductions like Section 179, all businesses have to do is fill out a form — in this case, Form 4562.
The only limit businesses must know about is the deduction amount which sits at $1,080,000 for the 2022 tax year. Moreover, the total amount of equipment you can purchase to qualify for this deduction Is $2,700,000. After this, the amount phases out dollar by dollar, or the deductible amount begins to decrease.
Stay Modern with Your Tech
Writing off technology purchases has never been easier for businesses. With technology tax deductions like Section 179, companies can improve their technology while enjoying better spending at any time of the year.
If you’d like to learn more about what technology best fits your company’s unique needs, consult our IT experts.
To learn more about other IT resources and strategies, check out additional blogs in our resources section.
The information provided in this blog is for educational purposes only. Consult your tax professional for information on how Section 179 may relate to your business.