It may be hard to believe that the time is already here, but we’re coming up on the beginning of yet another brand new year. While the new year means a fresh start, it also means something that we’re used to — something that’s not quite as exciting as the other things awaiting us in 2020: tax prep.
We know, it probably doesn’t sound like a ton of fun, but as your West Texas John Deere dealer, we want to take this time to refresh you on the Section 179 deduction, what it entails, and how you can qualify for it. You have plenty of work in front of you, so we’ll keep it short.
Let’s dive in!
What is the Section 179 deduction?
Small businesses (especially farmers) never stop needing new equipment, and the Section 179 deduction was designed as an incentive for them to invest in this equipment, and in turn, the economy.
Instead of depreciating an asset over a period of time, the Section 179 Deduction allows farmers to deduct the full purchase price of pieces of equipment and off-the-shelf software that qualify. Currently, the maximum deduction limit for the 2019 tax year is $1,000,000. The total amount of equipment purchased is limited to $2,500,000, after which the deduction will begin to phase out.
Approved pieces of equipment and off-the-shelf software that were purchased, financed, or leased during the 2019 tax year will qualify for this deduction. Furthermore, the equipment in question should be used for business purposes more than 50% of the time in order to be eligible.
From new tractors and cotton strippers to skid steers and sprayers, the Section 179 deduction gives farmers a unique opportunity to replace their old, outdated equipment while saving on the amount of money paid to the IRS at the end of the year.
How much can you save?
Are you curious about how much this deduction can actually save you this tax season? Take away the guesswork by using this user-friendly deduction calculator! Now, in a shift from recent years, bonus depreciation is also available at 100% for new and used equipment. This shift in tax law gives certain farmers an even bigger opportunity to put money back into their pocket and their ag operation.
Section 179 has been known to go through changes with little to no notice, so it’s important to act fast to leverage the best possible savings for the 2019 tax year! Contact your CPA for assistance on this, information on bonus depreciation, and more guidance regarding your taxes.
And for all your equipment needs, head to your nearest Hurst Farm Supply. We’ve got all the equipment you might need to take advantage of these great tax savings. And as we inch closer to spring, it’s time to start thinking about your turf needs and all of the hardworking tools that are necessary for satisfying them. Click below to get a headstart on shopping!