The IRS’ New 100% Depreciation Deduction and What Write-Offs You Can Look Forward To

  • 21 Oct 2019
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100% depreciation deduction

In September of 2019, the Treasury Department and the Internal Revenue Service released final regulations and additional proposed regulations under section 168(k) of the Internal Revenue Code on the new 100% additional first year depreciation deduction. This 100% depreciation deduction is great news for businesses both big and small as it makes it possible for them to write off most depreciable business assets in the year they are placed in service by the business.

Below, we take a look at the depreciation deduction in more detail, along with a brief summary of the types of business assets that business owners will be able to write-off going forward. 

Which Assets Are Included?

According to the final regulations, depreciable business assets that can be written off in the year they are placed in service by the businesses include machinery, equipment, computers, appliances, and furniture, to name a few. However, these assets only qualify as write-offs if they were placed in service after September 27, 2017.

What Are the Additional Proposed Regulations That Have Been Submitted?

The additional proposed regulations include rules regarding:

  • Certain property not eligible for the additional first year depreciation deduction
  • A de minimis use rule for determining whether a taxpayer previously used property
  • Components acquired after September 27, 2017, of larger property for which construction began before September 28, 2017
  • Other aspects not dealt with in the previous August 2018 proposed regulations

I Want to Elect out But Have Already Filed my 2018 Tax Return – What Now?

Do not worry. Taxpayers who have filed their 2018 return already but who still wish to elect out of the 100% depreciation deduction will be granted a leeway of six months from the original deadline, without an extension, to file an amended return. You may wish to elect out if you would like to avoid the expiration of income tax credits or net operating losses.

Looking for professional assistance in terms of the new 100% depreciation deduction? Contact the financial service experts at Georgen Scarborough Associates today!

Tax Planning Tips for Small Businesses in the U.S.

Tax-preparation, CPA, tax advisor

Tax planning is essential for all businesses in the U.S. in order to ensure compliance and avoid hefty penalties. Remember, tax planning is not the same as tax-preparation (which is obviously just as important). Tax planning refers to the process of strategizing in terms of exactly what needs to be filed and which records need to be retained, as well as what deductions can be taken advantage of and which credits can be incurred. Tax-preparation, on the other hand, refers to the process of arranging your taxes for annual filings. 

With that in mind, here are a few helpful tax planning tips for small businesses, courtesy of Georgen Scarborough Associates. 

Seek out Assistance 

As the owner of a small business, you probably have a finger in every pie. In short, you have a lot on your plate and probably will not have enough time to dedicate toward the management of the financial aspect of your business. This is why it is strongly advised to partner with a tax advisor or CPA who can take over in this regard and assist in reducing the tax burden. 

Stay on Top of Deductions 

Make the most of the deductions available to you by ensuring that you keep detailed records of all related and relevant business expenses for audit purposes. You will need to hold on to the original vendor invoices and other receipts to prove that the expenses were made for business purposes, and not for personal gain. Bank statements will rarely suffice. 

Keep up to Date with Tax Law Changes

Tax laws are changing all the time! So, it is essential that small business owners keep abreast of how and when these changes are taking place – even if you work with a tax advisor. The IRS website is a wonderful resource for this kind of information. 

Looking for CPAs that you can count on for optimized tax planning? Look no further than the experts at Georgen Scarborough Associates. Contact us today.