A lot of farm owners were disappointed by the Economic Stimulus Package. Unless you are in one of the industries earmarked for funding, such as construction, green tech or transportation, there aren’t a lot of provisions that specifically help you.
So it would be easy to dismiss the Stimulus bill. But if you did, you’d be missing out on two key provisions that can bring your company a real competitive advantage.
Although we have had these provisions off and on in the past, if it would not have been for the Stimulus bill, we would not have had them in our tax planning tool box in 2009.
o Section 179 of the Federal income tax code allows you to write off certain expenditures in a single calendar year, instead of depreciating them over a number of years – giving an immediate tax benefit for 2009. Businesses can deduct up to $250,000 for purchases of equipment, including computer hardware and off-the-shelf (i.e., non-custom) software, in 2009.
o To the extent that you cannot take the Section 179 deduction, you may be able to claim a bonus first-year depreciation of 50% of the remainder of the cost of the items purchased.
The beauty of these two provisions in the Stimulus bill? They give small businesses extra incentive to invest in themselves. You take larger tax write-offs for the year in which you make your purchases, instead of spreading those write-offs out over several years.
Think of it as the government subsidizing your purchases. Here is an online Section 179 calculator, where you can quickly calculate the net cost of equipment after tax deductions.
A word of warning, each person's circumstances are different and the Section 179 rule has a number of requirements. Contact us to get qualified tax advice tailored to your circumstances. It will help you make smarter business decisions.
