Understanding depreciation deductions as Tax Day looms
April 03, 2012
With Tax Day approaching, small businesses should regard maximizing their return as a priority.
"Understanding recent tax law changes and claiming deductions - expenses claimed for a tax reduction - are key to making sure your business gets the full amount of money from the government this year," wrote small business expert Bruce Freeman in a column for the East Valley Tribune.
Senior tax analyst Mike D'Avolio examined several key tax law changes that will affect small enterprises this year. For instance, companies are allowed to claim a 100 percent bonus depreciation
deduction for qualifying fixed assets
purchased in 2011 and a 50 percent deduction for eligible items purchased in 2012. While the purchase of used property does not fall under the umbrella of the bonus depreciation provision, it does qualify for a Section 179 expense deduction.
While bonus depreciation allows companies to immediately write off 100 percent or 50 percent of an item's cost, depending on the year the fixed asset
was purchased, Section 179 allows the deduction of the full purchase price of qualifying equipment purchased or financed during the tax year.