Did you know that rules on small equipment depreciation have changed?

Typically, to expense any equipment you had to make a “Section 179” election to expense the asset in the current year.  Otherwise you were required to spread the expense over several years.

The S-179 election is still available, but has a cap on the amount that you can expense, and that cap changes every year.  What a lot of people don’t know is that the IRS changed the rules so that you are able to just write off as an expense any equipment purchases in the amount of $200 or less in any year.

The $200 amount is a PER ASSET amount, so if you buy 3 pieces of equipment that cost $200 or less, you can expense all three!  If you buy 30 of them, same thing; you can write off as many as you want.  It doesn’t matter if they are on the same invoice either: if you bought 5 fax machines at $175 each and all at the same time, you can write off the whole thing as an expense on your taxes.

small equipmentIf you have a written statement documenting a policy that you want to write off a higher dollar amount, you can up to $500 per asset.  So, if you want to expense all assets with a purchase amount of $500 each, you could!

There are a variety of rules that may apply (such as the policy statement that needs to be created by the beginning of the year) so run this info by a good accountant to keep you on track.

But at least you know there is something out there for you! No more keeping track of small equipment purchases, you can just write them off! If you need help with tax preparation in Denver, contact us.