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12/4/2017 |
Insights |
Capitalize On Your Equipment Purchases |
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Capitalize On Your Equipment Purchases Understanding the IRS's Section 179 deduction by Roger P. Levin, DDS How would you like to receive a $40,000 tax deduction for 2017? That would probably greatly reduce or maybe even eliminate any taxes owed by your practice. You could receive this deduction if you purchased equipment that cost $40,000 in total and put it into use this year. Wait, you say you've invested even more in your practice this year? Well, that's even better. According to the US Internal Revenue Service's (IRS) Section 179 deduction, you can spend up to $500,000 on equipment, including software, and get an equivalent tax deduction for that same tax year. For example, if you purchased a new CEREC machine and put it into use this year, you may be able to deduct the full cost for 2017. The Section 179 deduction was created to spur small business investment. Throughout the years, Congress has changed the amount—raising it, lowering it, and even eliminating it. For now, the $500,000 amount is in effect, but tax laws can change. With a new administration, the potential exists that the amount could be altered or eliminated in the future. Investing in Your Practice With the exception of dental school, your practice is the best investment you've made in your career. However, for it to accrue value, you must continually reinvest in it. During some years, you focus on the smaller stuff, such as repainting the reception area and landscaping the exterior. In other years, you may need to buy new computers and software, replace dental chairs, or purchase diagnostic equipment. If it's one of those years when a big purchase is looming, check with your accountant and keep the Section 179 deduction in mind. However, a tax deduction—no matter how significant—should never be the sole deciding factor for upgrading or replacing anything in your practice. Before you make a major purchase, you should first analyze the potential return-on-investment (ROI). If you invest $40,000 in clinical equipment, how soon would you be able to recoup that money? Read full article on Inside Dentistry.
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