There has been a big change in the amount of equipment and furniture your business may write off immediately (instead of capitalizing and depreciating it) in 2014 for federal tax purposes. This is called the Section 179 deduction.
As it stands right now, for tax years beginning in 2014, your business can only expense up to $25,000 (Yes, that is twenty-five thousand dollars) of equipment purchases. The phase out of this Section 179 deduction begins when your equipment purchases exceed $200,000. In previous tax years (2010 through 2013), your business could expense up to $500,000 of these items provided your total purchases did not exceed $2,000,000 during the year. This is a dramatic change for this year and may result in much higher tax bills for taxpayers.
There is some good news. For his fiscal 2015 Budget, The President has proposed retroactively reinstating the $500,000 limit to tax years beginning in 2014. And better yet, he wants to make this proposal permanent; however, it must first be enacted into law.
Your tax advisors at Alerding CPA Group will notify you immediately if and when this proposal becomes law. Feel free to call us at 317-569-4181 with any questions. In the mean time, you may wish to urge your Congressional representative to enact this provision.