Tax Season and Your Critical Power Systems – Deductions You Can Use
With tax season in full swing, it is a good time to explore tax deductions that may help your bottom line. At QPS, we find that many of our clients don’t realize that there are deductions or tax benefits regarding your critical power equipment available.
As with any tax related topic, please consult with your tax professional to see if some of the ideas below make sense for your organization.
- Section 179, Bonus Depreciation and Leasehold Improvements are a few of the possible deductions that can help your business save money.
Section 179 is an incentive included in the Stimulus Bill to help small businesses. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in their business. Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. That means you may be able to purchase a new UPS unit and deduct the full purchase price from your gross profits. Businesses that purchase, finance or lease less than $500,000 in new or used business equipment during the tax year 2016 may qualify for the Section 179 Deduction.
Try this Section 179 deduction calculator to see how this could apply to you.
Bonus depreciation is currently offered, and has been extended through 2019. For 2016, businesses can depreciate 50% of new eligible equipment costs. This percentage changes annually, and is expected to decrease to 30% by 2019. An accelerated depreciation method, bonus depreciation is a valuable tax saving tool for businesses; as well as an added incentive to purchase new equipment.
Another tax credit that may be useful is the leasehold improvement. A leasehold improvement consists of modifications made to rental premises in order to tailor the location to specific tenant needs. Tax deductions for specialized lighting, additions, remodeling or renovations, and upgraded technology systems may apply. The depreciation is capitalized and amortized over the remaining life of the lease term or life of the improvement.
As you access your infrastructure needs for 2017 and realize it may be time to invest in new UPS units, generators, lighting inverters or other critical power equipment, keep these tax credits and deductions in mind, as they may enhance your business and add to your bottom line.