Section 179 Benefits for Wyoming Businesses
Time is winding down for Wyoming businesses to use the tax deductions available under Section 179 of the IRS tax code. You have until December 31st if you want to use those deductions this year.
Wyoming business owners are always looking for ways to maximize deductions to reduce their tax burden – and for a good reason. Something that many business leaders are not familiar with is the tax code Section 179. If you’re unaware of what Section 179 is, we’ll explain what you need to know about it and how you can take advantage of the tax deduction.
What Is the Section 179 Deduction?
Section 179 allows your business to take the cost of certain types of business equipment and software and subtract up to $1,050,000 of it from your taxable income for the year you purchase it. Qualifying purchases can include equipment and software that will be used for business purposes.
However, the deduction will reduce one dollar for every dollar over $2,620,000. So, the more your business spends over $2,620,000 on equipment, the more your $1,050,000 deduction will go down. Your deduction reaches zero once $3,670,000 of equipment is purchased, leased, or financed.
For Section 179 deductions in 2021, equipment must be purchased/leased/financed and put into use by midnight on December 31, 2021.
What Can My Business Claim under Section 179?
Before moving forward with the Section 179 tax deduction, it’s critical to have a baseline knowledge of what your business can deduct and what will not be eligible for deduction. You do not want to make a major investment in business purchases only to find out the purchases you have made are not deductible under Section 179.
Let’s look at what purchases will be deductible (This deduction is good on new and used equipment):
- Office Furniture
- Networking Equipment / Switches
- Telecommunications Systems
- Routers and Firewalls
- Storage Devices/On-site backups
Can My Business Use the Section 179 Deduction on Software?
Most business software will be eligible for the Section 179 deduction — even if the software has been leased or financed. Qualifying software must be used for income-producing activities and the software must be expected to last more than one year. The software must also be available for purchase to the general public and can’t be largely modified. That essentially means custom-built programs will not qualify under Section 179.
Is My Wyoming Business Eligible for the Section 179 Tax Deduction?
Does your Wyoming business qualify for the Section 179 tax deduction? Answer the following questions to help you determine if your business qualifies for a Section 179 Tax Law deduction.
- Are your purchases considered tangible property, such as computer software, equipment, or office furniture?
- Will the tangible property be used more than 50% of the time for your business?
- Will the assets be put into use by December 31, 2021?
While K2 Technologies specializes in equipping our clients with an IT infrastructure that is customizable and scalable, we believe it’s critical to inform our clients on important topics, such as the Section 179 tax deduction. When we discovered that so many businesses were either not familiar with Section 179 or were not doing anything to take advantage of this deduction, we felt it was our duty to step in and educate them on its benefits.
One of the reasons businesses invest in hardware and software is the opportunities they will have on business operations. If the software and hardware increase your productivity and profitability, it can give you a competitive advantage. Section 179 is a great opportunity to accomplish both of those ends while leveraging deductions provided by the IRS.
If you have any questions about the Section 179 tax deduction or anything else, remember that you can contact us anytime. We’re here to help! Call us at (307) 200-7567.