As more and more clinical practices and dental labs invest in digital technology, it becomes even more important to understand the tax benefits and savings available to small businesses. Section 179 of the IRS Tax Code allows your business to deduct the entire purchase price of qualifying equipment and/or software from gross income as long as the qualifying equipment is acquired before the end of the year. Here are answers to some common questions:
What equipment is eligible?
Any equipment, computers, off-the-shelf software, tangible property, vehicles, office furniture and office equipment, purchased and put into use before December 31st, 2019 is eligible for qualification. These objects qualify whether new or used, and whether purchased outright, leased, or financed.
As a dental professional, this deduction includes things such as 3D printers, curing units, CAD/CAM equipment, mills, scanners, design software, and furnaces.
What are the deduction limits?
For 2019, the total amount for a single piece of equipment is $1,000,000. The total deduction for all purchases is $2,500,000.
What is the carryover rule?
If the Section 179 deduction is greater than taxable income, any excess can be carried over to the following tax year. For example, if you purchase $100,000 in equipment with a $75,000 a year taxable income, the remaining $25,000 can be deducted in 2020.
What should I do next?
Research. Research the best equipment for your needs. Then, do your own research on the Section 179 deduction to learn more about how your business can benefit. And finally, talk with an accountant. Tax laws can be tricky, and an accountant can examine your specific scenario and walk through your scenario with you.
Where can I find more information?
An accountant will be your best resource, but here are the resources used to write this blog.
IRS Website: Section 179 Deduction
* This blog is not intended to offer legal or financial advice. Consult with a certified professional for questions about your scenario.