It is the end of the year and many of us are looking for ways to reduce the taxes that our business will have to pay next year. Follow these tips to leverage IT and save on your taxes. For specifics on how any of these suggestions will affect your business, please contact a tax professional.
For any last minute IT purchases, you may qualify to depreciate the full purchase price on your 2011 taxes. This includes hardware, off-the-shelf software and some non-custom software even if it is leased. Section 179 of the IRS tax code allows for this deduction if you put the IT purchase into service this year. The Section 179 depreciation deduction covers both new and used equipment, so you can maximize your IT expense while reducing your taxes.
In addition, purchases of new equipment made in 2011 qualify for a special 100 percent bonus depreciation if Section 179 has been maximized. The various stimulus acts have increased the amount and percentage of deductions. Because these acts are good for varying dates, it is best to take advantage of them before they expire. There are many ways to save taxes this year through equipment purchases but you must follow the rules. Discuss all of this with your tax professional to take advantage of these opportunities.
If you are in the giving mood, then donating IT equipment also is a good way to reduce your taxes. We have many local schools, universities, and colleges that need IT equipment and qualify as nonprofit organizations. While it is always good to help others, if you want a tax deduction, make sure your charitable recipient qualifies as a tax-exempt organization. The equipment given to these charities can be your existing IT equipment or equipment that you buy for them.
Never miss a local story.
Stephen Jaynes, vice president of sales at xByte Technologies, can be reached at www.xbyte.com or 941-358-9770.