The 4-1-1 on Utilizing Section 179 for Forklift & Equipment Purchases in 2020
What is the Section 179 Deduction?
Often, when we think of tax codes, it is usually met with dread and feelings of confusion, but the Section 179 deduction is quite simple and straight forward.
Section 179 of the IRS tax code is, essentially, an incentive by the U.S. government to encourage business owners to purchase equipment and invest in their businesses by allowing them to deduct the full purchase price of equipment, as well as, software that is either purchased outright or financed during the current tax year.
While large businesses also see benefits from the Section 179 deduction, it offers a much-needed tax benefit to small and medium sized businesses, and those businesses who are taking advantage of the deduction are seeing great benefits.
What Makes Section 179 So Attractive
In years past, businesses were able to write off the cost of new equipment gradually over the life of the equipment through depreciation. While any tax deduction is welcomed, that was not nearly as attractive to smaller business owners and was less likely to encourage them to invest in themselves. What business owners wanted most was the ability to write off the entire cost of new equipment upfront rather than spreading the deduction out over time, and that is exactly what Section 179 offers.
The Basics of Section 179
What purchases qualify for Section 179?
Under Section 179, businesses are permitted to depreciate and deduct the entire cost of new or used material handling equipment, vehicles and software that is bought, financed or leased and put into use within the tax year, between January 1, 2020 and December 31, 2020. The qualifying equipment must be utilized for business purposes for more than 50% of the time in order to use the Section 179 deduction.
Is there a limit to how much I can deduct under Section 179 in 2020?
Yes, Section 179 does have a cap to the total amount that businesses are able to write off within a tax year. For 2020, the limit deduction is $1,040,000. In addition, there is a cap on the total amount a business can spend in one year to qualify for the deduction. Any amount spent over the $1,040,000 deduction cap, up to $2,590.000, in a given year can be deducted the following year through bonus depreciation.
How Does Section 179 Work With Bonus Depreciation
How Can You Take Advantage of Section 179?
The first step to taking advantage of Section 179 deduction in the 2020 tax year is to contact Madland Toyota-Lift today so that our material handling equipment professionals can assist you in purchasing new or used equipment that is best suited to your application need and budget. At Madland Toyota-Lift, our team of experts will take the guess-work out of selecting the ideal equipment for your material handling needs so that you can put that equipment to work for you before the December 31, 2020 deadline.
Next, we suggest that you contact your company's financial advisors to see how you can use your equipment purchases on your 2020 taxes to take advantage of the Section 179 deduction to your maximum benefit.
At Madland Toyota-Lift, we offer a wide selection of new and used equipment to choose from and material handling experts to assist you with your purchase. Contact us today!
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