Immediate changes to business depreciation

June 01, 2018 by Selena Quintanilla
spreadsheet and calculator

Operating a business is stressful enough without considering the tax implications, but when it comes to taxes burying your head in the sand is not an option. Besides, the Tax Cuts and Job Act of 2017 introduces some perks for small business owners that you won't want to miss.
 
Let's talk depreciation deductions:
 

  • Effective immediately, businesses can expense more section 179 property under the Tax Cuts and Job Act the year it is purchased and placed in service. Section 179 property includes tangible property such as buildings, equipment, machinery, vehicles, furniture, computers and software.
  • The phase-out threshold has increased from $2 million to $2.5 million, and the maximum deduction allowed has doubled from $500,000 to $1,000,000. These adjustments will enable taxpayers to make a little more during the year and take a little more come time to file.

In addition to the above changes, certain improvements can also be expensed under the new law. While reviewing these changes, keep in mind that the modifications apply to property placed in service in tax years beginning after December 31, 2017.
 
  • Improvements to non-residential property, such as roofing, fire protection systems, security systems, heating and air conditioning systems, and other “qualified improvement property” of this type made to the interior of a building can now be deducted as long as the changes occurred after the date the property was first placed into service.
  • Changes to the internal structural framework of a building, service to escalator or elevators, and expansion of the building do not qualify for depreciation or deduction purposes.

Though tax topics can be intimidating, staying up to date with the current law ensures compliance and decreases the likelihood of missing out on any credits or deductions for which you may qualify.

SEARCH

 

Selena Quintanilla, CTEC
Communications Associate

 

Selena Quintanilla is a Communications Associate at TaxAudit, and a California Tax Education Council (CTEC) registered tax professional. She is now on a mission to bring clarity and comprehensibility to a topic that keeps us all up at night at least once a year-TAXES! Please, send coffee! 


 

Recent Articles

Refund check laying on top of a $100 bill
An IRS Notice CP32A is informing you that your refund check has not been claimed. To resolve this notice, you must call to request a new refund check.
Woman Reading Letter
IRS Notice CP21C is sent out when a taxpayer requests to make a change to their tax return. The notice informs the taxpayer that the change has been completed.
House for Sale
Details regarding the disposition of grouping of activities in order to more easily satisfy the material participation requirements for the RE Pro status.
Man opening a letter
IRS CP06A notice asks you to verify the Premium Tax Credit you claimed on your tax return with documentation. How should you properly respond to this notice?
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.