If you had to buy extra laptops and equipment for your employees to work from home because of the COVID-19 pandemic, this might be your year to take advantage of accelerated depreciation allowed by Section 179 of the IRS Tax Code. Not only should you look back through the past months to see what you bought, you should look forward to your 2021 projections, and see what you might be able to purchase before the end of 2020, so that you can save even more on your taxes.
Accelerated Depreciation with Section 179
Section 179 of the IRS Tax Code is intended to give small and medium-sized businesses incentives to purchase equipment and stimulate investments that support business growth, by allowing them a tax break through full depreciation in one year. In past years, this deduction had a reputation for being a tax loophole for business owners to write off luxury vehicles, but Section 179 has been refined to close that loophole and give businesses the opportunity to write off up to $1,040,000 in investments in one year.
Get a Tax Break for Computer and Office Equipment Purchases
Computer equipment and off-the-shelf software are included on the list of acceptable purchases. That includes workstations and laptops; office equipment such as printers and phones; as well as onsite servers and data backup equipment.
If you had to buy extra laptops and associated equipment so that your people could do their jobs from home, Section 179 is your chance to lessen the blow of those additional costs.
Office Environment Modifications Due to COVID-19
The materials that you had to buy to make workspaces meet sanitation and social distancing requirements may also be included in Section 179 this year. That includes plexiglass, sanitizing stations, signage, and other materials that you had to buy to make employee or customer areas conform to new standards.
Check Your Computer Refresh Schedule
There’s still time to reap the benefits of Section 179 tax breaks on computer and office equipment purchased in 2020. Your IT team should be able to identify the equipment that will need to be updated and help your financial specialist make a plan for these expenditures before the end of the year.
*Note: This article is not financial advice. Consult your accounting and finance specialists to learn how Section 179 can be specifically applied to your business.
Don’t Have a Hardware Refresh Schedule?
If you ask your IT team for a hardware refresh schedule and they don’t have one, that’s a sign that IT is underperforming. Download “5 Signs IT is Underperforming” to see if there are other signs that gaps in IT are holding back your business.