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2013 Tax Tips

Thanks to the new 2013 tax guidelines,
this is THE year to Purchase Machinery!

Read on to see why...

2013 Deductions:
(A) Equipment Cost: $
(B) Section 179 Deduction (up to $500,000): - $
(C) Balance Remaining after Section 179 deduction: = $
(D) 50% Bonus Depreciation Allowance (new equipment only): * %
(E) Remaining Taxable Balance : = $
(F) 1st Year Depreciation Expense 7-year Asset Life (x 14.29%): * $
(G) Total Deductions and Depreciation : = $
2013 Tax Savings:
(H) Total 2013 Deductions & Depreciation (from (G) above): = $
(J) Current Tax Bracket (i.e. 35%): * %
(K) Tax Savings on Equipment Purchase: = $
(L) Net Cost of Equipment after Tax Savings: = $

Section 179

The 2013 Section 179 tax advantages are the best they've been in years! The deduction for equipment purchases, new or used, has been raised to $500,000.00! (Last year it was capped at $139,000) This will significantly increase your bottom line since you can deduct the FULL purchase price of equipment bought in 2013, up to $500,000. The ROI on your equipment purchase just went way up! Check for yourself - use the calculator below to see how much you can save. Simply put in the price of the machine and your tax bracket. The calculator will instantly show you the financial benefit of this year's Section 179 deductions and depreciation!

Limitations

While it is a great tax incentive, there are a few limitations to Section 179. The total cost of the deducted equipment in 2013 cannot exceed the total amount of the taxable income you are reporting for 2013 (so in other words, you can't writeoff more than you report as gross taxable income). The writeoff is reduced dollar for dollar to the extent a business purchases more than $2,000,000 in 2013. In addition, as with any tax question, you should check your local state tax laws. In order to qualify for the Section 179 Deduction, the equipment must be purchased, financed or leased and put into service by December 31, 2013.

Bonus Depreciation

In addition to the immediate expensing allowed under IRC Section 179, businesses acquiring qualifying new equipment are allowed to depreciate those costs by utilizing a temporary 50% bonus depreciation allowance. Additional expensing for both new and used qualifying equipment is allowed with the use of a standard first year depreciation allowance (under MACRS rules, 14.29% for equipment with 7-year class life as defined in IRC Section 168).

Please Note

Section 179 Deduction is available for most new and used capital equipment, and also includes certain software. Bonus Depreciation can be taken on new equipment only (no used equipment, no software). When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation - unless the business has no taxable profit in the given tax year.