Section 179 Enhanced Limits Extended for 2010 tax year!!
The HIRE Act of 2010 – The ”Hiring Incentives to Restore Employment Act” of 2010 passed on a bipartisan Senate vote of 68-29 extending the enhanced Section 179 deductions of 2008 / 2009 into 2010.
You can now write-off up to $250,000 of qualified property during the 2010 tax year – subject to a phase-out if you have capital expenditures exceeding $800,000.
Section 179 of the IRS Tax Code allows you to deduct, for the current tax year, the full purchase price of financed or leased software that qualifies for the deduction.
The software purchased or leased must be within the specified dollar limits of Section 179, and the software must be placed into service in the same tax year that the deduction is being taken (for tax year 2010, this means the software must be put into service between 01/01/2010 and 12/31/2010).
Section 179 Deductions
Most people think the Section 179 Deduction is a complicated tax code. It really isn”t, as the following will show you.
Essentially, Section 179 of the IRS tax code allows your clinic to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) the software, you can deduct the FULL PURCHASE PRICE from your gross income. It”s an incentive created by the U.S. Government to encourage clinics to buy software and invest.
How does Section 179 work?
When you buy software, it typically gets to write them off a little at a time through depreciation. In other words, if you spend $50,000 on software, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example.)
Now, while it”s true that this is better than no write off at all, most of them would really prefer to write off the entire software purchase price for the year they bought it.
Example Showing your Savings:
|2010 Software Purchases or Leases||$50,000|
|First Year Write-Off (Under the law, the $50,000 is well under the limit for Section 179 deduction and is entirely deductible in the first year)||$50,000|
|Tax Savings (Assume a 35% tax rate: $50k x .35 = $17.5k)||$17,500|
|Net Equipment or Software Cost ($50k – $17.5k = $32.5k)||$32,500|
Note: The HIRE Act does not extend the 50% bonus depreciation that was available in the 2009 tax year. (The expired incentive is pending further legislation as the House approved an extension but the Senate has not.)
For more information on the potential benefits of the HIRE ACT To your Practice, talk to Our EMR Experts Now.
For more reference on the HIRE ACT, visit: www.section179.org