While we might not enjoy paying taxes, we all love tax savings and with the change made to US tax code regulation: Section 179 of the US IRS tax code if you’re a US taxpayer you can now deduct the full purchase price of software you license in 2010*. And you can deduct it all in 2010, rather than depreciate it over multiple years. This means your business can realize huge tax savings when you make a qualifying GFI Software purchase before December 31, 2010!
What is the US IRS Section 179 Tax Deduction?
Section 179 of the US IRS tax code allows US businesses to deduct the full purchase price of qualifying software purchased or financed during the tax year. That means that if you, as a US taxpayer, buy (or lease) a piece of qualifying software, you can deduct the full purchase price from your gross income. It’s an incentive created by the US Government to encourage businesses to buy software and invest in themselves.
How does Section 179 work?
Typically when your business buys certain business software, you write it off based on a depreciation schedule. In other words, if your company spends e.g. $3,000 on software, it can write off (say) $1,000 a year for three years.
Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire software purchase price for the year they buy it, allowing them to potentially buy more software in that same year rather than waiting. The whole purpose behind Section 179 of the IRS Tax Code is to motivate the American economy (and your business) to move in a positive direction.
- For most small businesses (adding total equipment, software, etc., totaling less than $500,000 in 2010), the entire cost can be written off on the 2010 tax return.
- For businesses adding even more than $500,000, the write-offs remain substantial.
Estimate Your Savings
To give you an estimate of how much money you can save, here’s a Section 179 Deduction Calculator to make computing Section 179 deductions simple.
Note: Check with your tax professional to confirm your eligibility and the amount of your savings. Applicable for US taxpayers only.
PLEASE CHECK WITH YOUR TAX ADVISOR FOR THE TAX SAVINGS APPLICABLE TO YOUR SPECIFIC SITUATION both in terms of eligibility and amount of savings. This tax saving is only applicable to US taxpayers. The information provided here is based on our understanding of Section 179 of the IRS Tax Code; however, the accuracy is not guaranteed. GFI Software and Section179.org and its owners, affiliates, suppliers, and partners are not tax advisors, and this site is not intended to offer any tax advice. Please consult with your qualified professional concerning your specific tax situation.