Is Your Shop Taking Advantage of IRS Section 179 Tax Deductions?
At Quality Automotive Equipment & Service, it's an important time of the year for us to share ways to save money with our clients, especially with all that is going on in the world regarding supply chain disruption and the added delays it's taking to get equipment to the customer, not to mention the higher cost on just about everything.
We encourage your business to investigate a bit to see if you can take advantage of a special tax deduction incentive from the IRS called a Section 179 Tax Deduction. Created by the Tax Cuts and Jobs Act (TCJA), this special deduction is not automatic and must be elected by filling out Part 1 of IRS Form 4562. Talk with your business accountant to see where and how you can take advantage of this incredible opportunity to write off the full cost of qualifying equipment from your 2021 taxable income.
What Types of Assets Qualify?
To qualify for Section 179 Tax Deduction, your asset must be tangible, physical personal property such as shop equipment, automotive lifts, vehicles, furniture, etc... Overall, the asset can be new or used purchased equipment as long as it used more than 50% in your business.
Over the last few years, the Tax Cut and Jobs Act has amended the definition of qualified personal property to include the following business expenses: roofing, heating, ventilation, air conditioning, fire protection, alarm/security systems and business vehicles as long as the vehicle exceeds 6,000 in gross vehicle weight.
What is the Maximum Deduction?
Since 2017, the TCJA has gradually increased the maximum deduction a business can take from $500,000 in 2017 to $1,050,000 in 2021, up from $1,040,000 in 2020. The deduction is good until you reach 2.62 million in purchases for the year. This is a one-time deduction but different than deductions in the past. It used to be that you could write off your equipment purchase but only a certain amount each year over the course of several years. Now, with the Section 179 Tax Deduction, you can deduct the entire purchase price if it meets the deduction requirements.
Here is a good article, created by our manufacturing partner, Hunter Engineering, that provides more insight into the Section 179 Tax Deduction.
Quality Automotive Equipment & Service provides a wide variety of shop parts, specialized automotive equipment and annual maintenance services that qualify your business to take advantage of these great tax breaks. If you plan on ordering equipment for 2022, it may be worth giving our team a call now in 2021 at 913-205-1350 so that you may first take advantage of proactive ordering to prevent crazy delays next year and secondly, gain the added benefit of full equipment deductions for 2021 in case these tax deductions go away in the future as they aren't guaranteed to last.
Quality AES is authorized dealers for manufacturers like Hunter, Rotary, Champion and Robinair and we look forward to working with your shop for all it's parts and automotive service equipment needs!