Showing posts with label section 179. Show all posts
Showing posts with label section 179. Show all posts

Thursday, November 9, 2023

Maximizing year-end planning: Section 179 for physicians – examples and benefits

As the year draws to a close, it is a pivotal time for physicians to begin financial planning for 2024. One way to kick-start planning is by taking advantage of Section 179.

Whether you are looking to invest in new equipment or enhance your practice’s overall financial health, understanding Section 179 is an important step in your year-end planning journey.

Let’s delve into the intricacies of Section 179, examine real-world examples, and uncover the tangible benefits it can offer medical professionals.


What Is Section 179?


Section 179 refers to the Internal Revenue Service (IRS) code that allows business taxpayers to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the property to be depreciated over time. Section 179 is designed to encourage small and medium-sized businesses to invest in capital assets by providing an upfront tax incentive. It allows businesses to deduct the cost of eligible assets in the year they are placed into service.


How does Section 179 work?


Qualifying property typically includes tangible, depreciable assets such as equipment, technology, furniture, and off-the-shelf software. Section 179 addresses assets that will retain their value after they are put into use. To claim the Section 179 deduction, the property must be used for business purposes for more than 50 percent of the time. Businesses must make an election on their tax return and specify the property for which the deduction is being claimed. Businesses structured as pass-through entities, such as partnerships and corporations, can pass the Section 179 deduction through to their owners who can then claim it on their individual tax returns.


What are the Section 179 limits?


In the 2023 tax year, the maximum deduction under Section 179 is $1,160,000.A business can combine multiple expenses to reach that total, but there is an overall limit to the eligible equipment you can buy and still receive a deduction. Your Section 179 deduction is limited to your business’s net income for the year – and you cannot use the Section 179 deduction to create a loss. If you have a net income of $100,000 before taking the Section 179 deduction and you purchase $125,000 of capital equipment, your deduction will be limited to $100,000.You can opt to take regular depreciation on the remaining assets, or you can carry the remaining $25,000 forward to next year as long as your net income allows it.


Does Section 179 cover real estate?


According to the IRS, Section 179 does not cover real estate purchases. If you purchase a new space for your practice, you will likely need to rely on depreciation to receive a tax benefit from that purchase.That said, there are a few special types of property that may qualify as a Section 179 expense including:
  • Roofs
  • Heating, Ventilation, and Air Conditioning
  • Security Systems
  • Fire alarm/protection systems




Courtesy of Henry Schein Financial Services



Can I finance equipment purchases and still benefit from Section 179?


Equipment and technology purchases can be financed while also taking advantage of Section 179. It is important to carefully consider the terms and options available to ensure they align with your practice’s specific needs. Henry Schein Financial Services is one option that offers financing to help physicians acquire new equipment and technology before the end of this year, so your practice can benefit from the Section 179 deduction.

For instance, through Henry Schein Financial Services, a 6-month deferral is available before making any payments. This allows your practice to generate revenue using your new equipment, and receive your Section 179 benefit before even making the first payment.

Using the example above, based on current rates for a five-year loan, the Section 179 tax savings will cover the first 16 payments. Try not to let the interest rate environment prevent you from making necessary investments into your business.

15% Off Medical Practice Supplies


VIEW ALL



Manual Prescription Pad (Large - Yellow)


Manual Prescription Pad (Large - Pink)

Manual Prescription Pads (Bright Orange)

Manual Prescription Pads (Light Pink)

Manual Prescription Pads (Light Yellow)

Manual Prescription Pad (Large - Blue)

Manual Prescription Pad (Large - White)


VIEW ALL




Posted by at No comments:
Labels: , ,

Thursday, December 29, 2022

Section 179 for medical practices

Continuing to invest in new equipment and technology has long been one of the key pillars to increasing efficiency, driving incremental revenue, and improving patient care within medical practices. But did you know that you can execute on this while maximizing tax deductions, helping to free up additional cash flow? It is likely you may have heard of Section 179, as it has been around in some form since 1958. However, do you know what Section 179 entails and how it can benefit your practice?


The 101 on Section 179


In its simplest form, Section 179 is a tax deduction for businesses, including medical practices, that receives its name from Section 179 of the IRS Tax Code. Section 179 allows businesses to deduct up to the full purchase price of qualified equipment, technology, software, and other qualifying purchases from their taxes within the same tax year, rather than requiring that the purchase be depreciated over time. By taking a Section 179 tax deduction, practices can receive a larger tax benefit immediately, freeing up additional cash flow to continue investing in the practice.


What qualifies for Section 179


Qualifying purchases for medical practices include typical medical equipment and technology, in addition to other capital purchases such as office furniture, air filtrations systems, and more. While it is never too early to start tax planning, as we approach the end of the year it is imperative that medical practices understand how timing impacts the ability to obtain a deduction. In order to take advantage of Section 179, the equipment must be purchased and placed into service before the end of the tax year and must be used for business purposes 100% of the time.


How your practice can maximize savings


Now let’s dive into what this actually means for your practice and how it works. Let’s say you buy a new piece of equipment or technology in 2022 for $75,000. Provided it is a qualifying asset, you may be able to deduct the entire cost of the equipment from your taxable income. If you are being taxed at a rate of 32%, you can potentially save $24,000 in taxes. Additionally, purchases that are financed are eligible as well, which means you can invest in your practice, benefit from tax savings, and manage your cash flow.


A win-win


The IRS has set strict limits to Section 179 which have changed significantly over time. In 2022, the maximum amount that can be deducted is $1,080,000. Additionally, the maximum amount of qualifying equipment that can be purchased is $2,700,000. However, once you reach that cap, you may be able to deduct the rest of your qualifying purchase under a different section of the tax code commonly referred to a “Bonus Depreciation” or “100% expensing”.

Medical practices can utilize both Section 179 and Bonus Depreciation, provided the Section 179 deduction is applied first. In 2022, Bonus Depreciation is 100% on qualified assets, but will begin to phase out starting in 2023. For qualifying assets placed into service in 2023 bonus depreciation will be reduced to 80% and will decrease 20% each of the following years until being completely phased out in 2027. All the more reason to invest this year.


Investing in your practice


Medical practitioners and administrative staff do not need to be experts in the tax code. A qualified financial services expert should guide you through the options available to you. However, it is vital that you understand the deadlines, so you do not miss an opportunity to maximize deductions and opportunities to invest in your practice particularly with bonus depreciation being reduced starting in 2023.


15% Off Medical Practice Supplies


VIEW ALL



Manual Prescription Pad (Large - Yellow)


Manual Prescription Pad (Large - Pink)

Manual Prescription Pads (Bright Orange)

Manual Prescription Pads (Light Pink)

Manual Prescription Pads (Light Yellow)

Manual Prescription Pad (Large - Blue)

Manual Prescription Pad (Large - White)


VIEW ALL

Posted by at No comments:
Labels: , ,
Subscribe to: Posts (Atom)