Depreciation is writing off on taxes of the cost of large purchases or investments in regular amounts over a number of years. Through a set of incentives designed for small business, you may claim a larger percentage, or, in some cases, all of the costs in the first year.
Through Bonus Depreciation, you can claim up to 100 percent of the cost of an item for the 2018 tax year.
Section 179 depreciation (first-year expensing) lets you deduct all or part of the costs of tangible personal property items like software, hardware, machinery and equipment used for your business at least 50 percent of the time.
The definition of “tangible property” is can seem somewhat unclear because while it includes some capital items, it excludes others, like land, buildings, and inventory.
Beginning January 1, 2018, the maximum annual expense deduction became $1 million (with rates adjusted annually for inflation).
If you have purchased a significant amount of software, hardware, machinery or equipment for your business, we should talk about how Bonus and Section 179 can help your business.