The decision to invest in new digital equipment can be a difficult one. With cost and ROI as some of the main purchase decision factors, what many dental lab owners fail to consider is any tax incentives or deductions that might come with purchasing new equipment. Section 179 of the IRS Tax Code does just that. It allows for the deduction of the full purchase price of qualifying equipment and/or software purchased or financed during the tax year, making those kinds of purchases financially attractive.
1) What Equipment Qualifies for Section 179?
Any equipment that is needed on an ongoing basis such as machinery, computers, software, vehicles or other tangible goods qualifies. For for dental labs this would include any CAD/CAM equipment, such as a scanner, mill or 3D printer.
Note: Equipment must be purchased and put in use between January 1, 2014 and December 31, 2014 or it is ineligible for the deduction.
2) How Much Can You Deduct?
For the upcoming 2014 tax season, Section 179 has been restored to its original limit of $25,000, plus an adjustment for inflation. In previous years, the deduction limit was $500,000.
3) Talk to Your Accountant.
Tax codes can be tricky and can change at anytime without warning. We highly recommend talking to your accountant about your specific equipment purchases and if they qualify for the Section 179 deduction.
What do you do now?
Research. Research possible CAD/CAM purchases, if you haven’t already done so. Then do your own research on Section 179. The more information you have, the more you can learn & understand about how your dental lab can benefit. Here the resources used in this article and are great resources for you to start your own research:
- Now’s The Time To Take Advantage of Tax Code Credit Deductions
- IRS website: Section 179 Deduction
Finally, call your accountant. He/she will be your best resource.