Maximize Your Tax Benefits On Equipment Purchases
IRS Section 179 Tax Allowance:
The Economic Stimulus Act of 2008 increased first-year write-offs of equipment from $128,000 up to $250,000 for 2008. Section 179 allows businesses to take a deduction for the cost of qualifying equipment & certain software purchases immediately, instead of depreciating it over a period of several years. The amount of qualifying purchases that may be placed in service after December 31,200* instead to $800,000 in 2008. This represents the maximum amount a doctor can purchase each year before he or she begins to lose the ability to claim this deduction. The allowable deduction will revert back to $25,000 beginning in 2011.
Under the IRS depreciation rules (MACRS, 5-year life,200% declining balance), 20% of the cost of equipment may be deducted the first year the equipment is placed in service.
How Does It Work??
Any equipment you purchase will have an immediate tax write-off up to $250,000 the first year.
Dental equipment purchased - $300,000
1st year write off Section 179 - $250,000
Normal First year Depreciation - $10,000
Total Deduction 1st year -$260,000
Marginal Tax Rate - 35%
Tax Savings - $90,000