The end of the 2016 year is not far away—are you aware of the enormous benefits of the tax code 179?
If your ophthalmic practice purchased or financed equipment or software, you may be able to deduct the full purchased price from your gross income.
Even better? If you were unaware of this section of the IRS tax code, there is still time to update your practice with the advanced, state-of-the-art equipment you’ve been waiting for before the fiscal year ends and receive the full deduction.
What Is Section 179?
This tax code, put into place by the U.S. government to encourage business growth and improvement, allows businesses to deduct the total purchase price of qualifying software and equipment during the tax year. Ultimately, the goal is to help small to medium-sized businesses feel tax relief and invest in themselves.
How Section 179 Works
After purchasing a piece of equipment, rather than yearly tax deductibles ($5,000 per year for five years, for example), Section 179 allows the entire cost to be written off—as long as it is under $500,000.
Qualifications for 179 (Spoiler: You Can Lease Equipment and Still Receive the Deduction in Some Cases!)
If your business purchased, financed, or even leased new or used equipment during the 2016 tax year, you qualify for Section 179.
From EMR software to digital refraction systems, most ophthalmic equipment and software qualify—so long as the equipment was purchased or financed and put to use between January 2016-December 2016.
So, as long as the equipment is new to you, was purchased, leased, or financed, and put to use in the 2016 year, you qualify for the Section 179 deduction.
There Are Some Limitations
Remember, this tax code was put into place to help small to medium-sized businesses succeed and feel tax relief; therefore, there are price caps—although they are fairly high for 2016:
Deduction Limit: $500,000 per equipment purchase
Spending Cap on All Equipment Purchases: $2,000,000
Bonus Depreciation: 50%
That’s a pretty high cap, giving you the freedom to really update and modernize your ophthalmic office without losing money.
Speaking of Bonus Depreciation…
Bonus depreciation is another jargon-y tax term that may seem a bit unclear. Typically, more large-scale businesses use bonus depreciation as an additional deductible above what is available with Section 179. Bonus depreciation does not reach a cap like Section 179 ($2,000,000), but will only offer a deductible for new equipment—not used.
One Last Thing: The 50% Use Minimum
The final qualifying factor Section 179 is this: the equipment or software must, obviously, be used for business purposes. In fact, the official requirement is that the equipment must be used for business purposes over 50% of the time.
If for some reason the equipment or software is not used solely for the business, multiply its total purchase cost by the percentage of its business-use for the amount eligible for your 179 deduction.
Is Your Equipment Distributor 179.org Certified?
At Veatch, we do everything we can to ensure our customers have the best equipment at the absolute best prices and specials—this includes keeping you up-to-date with every money-saving opportunity for your business.
Our equipment is Section 179 qualified; this means by purchasing your new equipment through us, you not only receive a full tax deduction, but you also update your practice and receive the added benefits of our service and repair team.
The Industry Is Moving Quickly—Use This Opportunity to Stay Ahead
After years in the ophthalmic industry, there’s been a sudden and strong shift toward digital. Equipment is advancing rapidly and the optometry field is among the fastest-growing in our country (source). The Section 179 deduction is the perfect opportunity for you to update your office to the digital age standard, where the industry is ultimately headed for good.
There’s still time. Take a look at our digital refraction systems and their many benefits and consider making the switch before the end of the tax year.