Section 179 Deduction Limits Increased for 2014

Posted by Deltek on December 23, 2014

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The Tax Extenders Bill (H.R. 5771) passed by the House Dec 3, 2014  was passed by the Senate on Dec 16, 2014 retroactively expanding the Section 179 deduction limits to $500,000 through December 31, 2014. This is a great opportunity for A&E firms and one that can have a significant impact on your firm’s tax liability.

A&E firms may want to accelerate capital expenditures they had planned for 2015 into 2014 to maximize the benefits.  It’s a great time to modernize your software environment and move to an A&E industry specific accounting and project management system. Section 179 is easy to use. All you need to do is buy (or lease) the equipment and use a specialized IRS form. Click here for Section 179 Deduction Form 4562.

Section 179 is a tax code created to help businesses. By allowing businesses to deduct the full amount of the purchase price of equipment (up to a certain amount) it is financially attractive for businesses. Equipment must be purchased and put into use between January 1, 2014 and December 31st, 2014.

Technically, the bill is a one-year retroactive extension of the tax breaks.  So even though it only lasts through the end of the month you can depreciate business equipment purchases made any time in 2014.  Almost all types of “business equipment” that a company buys or finances qualifies for the Section 179 deduction. This includes software, computers, office furniture, machines, large business vehicles and other tangible goods. Click here for more information on property that qualifies.

An increasingly popular use of Section 179 deduction is for software. This means that any software purchased before December 31st can be depreciated by 50% in addition to the normal first year depreciation schedule. Assuming a 35% tax bracket, this could result in savings of 20% to 35% off the price of software purchased in 2014. To determine exactly how much Section 179 can save your firm, take a look at the 2014 Section 179 Tax Deduction Calculator. For more information on software qualifications for the Section 179 Deduction click here.

Only the 2014 tax year will be covered by this measure. So it is a sound business decision for many to purchase or finance software immediately to make the December 31, 2014 cutoff for these newly expanded write-off provisions.

To learn more about how architecture and engineering firms can benefit from Section 179 and purchase Ajera – an integrated accounting and project management solution geared for A&E firms, contact us today at Deltek.

For more information about Section 179 and its impact on your firm go to http://section179.org/

Note: Although Sections 179 and 179D are similar in name, they are completely separate tax benefits. For more information on 179D click here.