…comes “tax season” -- and it’s already not that far away.
With that in mind, now is a great time to review your IT and other high value assets. If there are capital items overdue for replacement, or gaps in your IT plan (like the cheap Internet router that really ought to be a business-class firewall), this is an excellent time to address those – and maybe get a significant tax savings as well.
How? IRS Section 179 provides for same year expensing of items that would normally be subject to multi-year depreciation. This can be applied to equipment and software, like servers, PC’s, firewalls, backup appliances, or phone systems.
In 2018, that first year write-off can be up to $1,000,000! You can find more on IRS Section 179 and how it can help pay to keep your business IT current at www.section179.org. I’m sure we probably need to say that neither this column, nor that site, are intended to be individual accounting, tax, and/or legal advice. And I would ALWAYS recommend you consult with your tax professional.
This year, there are two other factors in play that make upgrades, especially of older PC’s, a very good idea before the year ends.
First, as we’ve talked about previously, Windows 7 will be out of support in January of 2020. If you have a large number of Windows 7 systems still in service, replacing as many of them as you can this year gives you the depreciation benefit AND a jump on upgrades that will need to be done in 2019 anyway.
Second, tariffs and trade uncertainty may result in price increases in the coming year. We’ve seen a little bit of that already – but some estimates of increases have ranged as high as 25, even 30%. I don’t know how likely that is… but if I had 15 computers to replace before January of 2020, I know I’d rather pay $800 for each of them today, than a $1000 each this spring.
So if you’re looking to reduce your business income tax bite, prepare for Windows 7 end of support, and avoid possible price increases in 2019, there’s still time to evaluate system replacements and upgrades – and put them in service before the end of the year. Let us know how we can help.
