Laundry owners got an early Christmas present this past December, when the Protecting Americans from Tax Hikes Act of 2015 was signed into law.<\/p>\n
This new law permanently (until further notice, at least) expanded the Section 179 deduction limit to $500,000. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.<\/p>\n
What’s more, 50 percent bonus depreciation will be extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.<\/p>\n
As small-business owners, we all should take advantage of this generous tax break. And, make no mistake, that’s exactly what it is \u2013 a very generous tax break.<\/p>\n
We are reminded every year (some of us every quarter) of the huge tax bill we owe the federal government. And every year we sit down with our accountant and ask the same question: what can we do to reduce these taxes and keep a little more money in the bank?<\/p>\n
For the last couple of years our helpful lawmakers in Washington, D.C. have been playing games, holding out on the approval of Section 179 until the last minute. In fact, in 2014, I was advised by my accountant not to make any large investment purchases, because it was not guaranteed that Section 179 would be approved \u2013 and making such purchases to help reduce taxes would just be a “roll of the dice.” So, I listened and lost out that year. And it wasn’t just me. Many of my store-owner customers also held back on large purchases for the same reason. We had a good year, but it could have been a great year.<\/p>\n
Then, in 2015, once again the legislature toyed with the federal budget and placed Section 179 on a teetering board. This time, my accountant advised me to go ahead with my planned investments. I let the dice roll and \u2013 after another December sweat-it-out \u2013 approval was granted. Given that, 2016 should be a great year!<\/p>\n
Section 179 doesn’t increase the total amount you can deduct, but it allows you to get your entire depreciation deduction in one year, rather than taking it a little at a time over the term of an asset’s useful life, which can be up to 39 years.<\/p>\n
Once again, there is a $500,000 limit on the total amount of business property expenses you can deduct each year under Section 179. When first enacted, the Section 179 annual limit was set at a relatively modest $10,000. Over the years, Congress kept raising the limit in an effort to help small businesses during tough economic times.<\/p>\n
Because Section 179 is intended to help small businesses, there is also a limit on the total amount of Section 179 property a business can purchase each year before a phase-out in the deduction begins. Under these rules, the amount you can deduct each year under Section 179 is reduced dollar for dollar by the amount your business investment purchases exceed the annual investment limit. The annual business investment limit is $2 million.<\/p>\n
The tax law was designed with businesses in mind and includes all types of “business equipment” laundry owners need to run their operations, including computers, office furniture, software, vehicles and other tangible goods.<\/p>\n
I can’t stress strongly enough that you must keep good records of the equipment you purchase during the year. This includes where you bought it, the date it was acquired and when it was installed (as to qualify for the tax benefits, the equipment must be placed in service, not sitting in a warehouse).<\/p>\n
Of course, given the history on Section 179, it can change without notice, so take advantage of this tax code while it’s around. Call and schedule a visit with your accountant. Ask about the amount of money you should be investing this year to take advantage of the Section 179 and bonus depreciation tax breaks.<\/p>\n
Then, meet with your friendly neighborhood laundry distributor to find just the right mix of equipment to best meet your store’s needs. Laundry owners got an early Christmas present this past December, when the Protecting Americans from Tax Hikes Act of 2015 was signed into law. This new law permanently (until further notice, at least) expanded the Section 179 deduction limit to $500,000. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in […]<\/p>\n","protected":false},"author":289,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","footnotes":""},"categories":[186],"tags":[],"class_list":["post-2629","post","type-post","status-publish","format-standard","hentry","category-viewpoint"],"_links":{"self":[{"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/posts\/2629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/users\/289"}],"replies":[{"embeddable":true,"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/comments?post=2629"}],"version-history":[{"count":1,"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/posts\/2629\/revisions"}],"predecessor-version":[{"id":4957,"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/posts\/2629\/revisions\/4957"}],"wp:attachment":[{"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/media?parent=2629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/categories?post=2629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/planetlaundry.com\/wp-json\/wp\/v2\/tags?post=2629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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