COVID forced many practices to put expenses like equipment or software upgrades on the back burner in order for items like protective gear and tools to ensure patient safety. However, there may be a solution that allows you to still obtain that new x-ray machine or dental software. It's called the Section 179 tax code.
In this blog post, we break down the details for what you need to know about the tax code, what purchases qualify, and how to claim your deduction for your practice.
What is Section 179?
Section 179 is part of the IRS tax code that allows businesses, like dental practices, to deduct up to the full purchase price of qualified equipment, technology, off-the-shelf software, and other qualifying purchases, from your taxes within the same year vs. having the purchase depreciated over time.
For 2021, the deduction limit is $1,050,000.
What purchases qualify under Section 179?
For dental practices, some of the items that qualify under Section 179 include things such as equipment like x-ray machines, out-of-the-box software, computers and other hardware - even office furniture. It's important to note that these purchases must be used for businesses purposes 100% of the time.
Another unique aspect about these purchases is that it does not apply only to new items. Equipment or technology purchases can be new or pre-owned, giving your team a broader range of choices.
One important thing to consider: in order to take advantage of the full deduction limit, the purchases must be paid for and installed before December 31, 2021. COVID has forced some vendors to have lead times of 8 - 12 weeks, so make sure you take this into account.
How do I claim a Section 179 tax deduction for my dental practice?
If you and your team feel that Section 179 is right for your practice, it's best to work with your tax advisor to determine if your practice is eligible to take advantage of this tax code and how much you can deduct. They can also help ensure you have the proper paperwork to submit to the IRS. You'll include the paperwork in your next tax return when it comes time to file.
If you're ready to make an upgrade or improve your practice's hardware, give Pact-One Solutions a call today. We can provide more insight into what equipment works best for your network as well as an installation plan.
