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Section 179 Yearly Tax Deduction

What is Section 179 Tax Deduction?

Section 179 of the United States Internal Revenue Code is a tax deduction that enables businesses to depreciate assets as an expense in the first year or the year they purchased an asset. All assets must be put to use by December 31 of the 2020 tax year.

Why should I care about this tax deduction?

In 2020, your business can deduct the full cost of qualified equipment purchases, up to $1,040,000, with a “total equipment purchase” limit of $2,590,000.

Besides, you can take advantage of 100% Bonus Depreciation on the “new to you” equipment this year.

How to calculate my savings from Section 179?*

A rule of thumb is to multiply the price of your equipment by your tax bracket. For example,

Equipment Purchase$1,150,000
First Year Write-Off$1,040,000
100% Bonus Depreciation$110,000
Normal First-Year Depreciation$0
Total First Year Deduction$1,150,000
Cash Savings (assuming a 35% tax bracket)$402,500
Equipment Cost After Tax $747,500$747,500
Example of Tax Deduction Calculation under Section 179, 2020

What qualifies as Tax Deductible assets under Section 179?

  • Tangible property or hard assets (such as machines, equipment, furniture)
  • Single-purpose agricultural or horticultural structures
  • Storage facilities
  • Off-the-shelf computer software placed in service during the tax year

What are the requirements?

  • New or Used equipment with a total price of up to $2,590,000
  • Must be acquired for business use
  • Must be put to use before December 31st, 2020

How can I benefit from this Tax Deduction?

AFG offers financing and leasing solutions that are compatible with Section 179. Benefit from tax savings this year and pay for your equipment over time.

Get a free quote on equipment financing today.

*The information on this site is for illustrative purposes only. Please consult with a qualified tax advisor concerning your specific situation.

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Why Use a Working Capital Loan to Pay Your Tax Balance?

There is no other way to put it. We all have to pay taxes every year. Even though the government is trying to help businesses mitigate possible losses, taxes need to be paid sooner or later.

Many small businesses run on thin margins, and a couple of unexpectedly slow months can put your business at risk. We understand that, and that is why we designed a program specifically for a situation like that. No more need to pile up cash before the tax season! You can get a competitive business loan to help you cover the tax payment and scatter the amount over the next few months.

Apply now and get up to $250,000 to pay taxes on time!

 

Why Should You Pay Business Tax on Time?

 

IRS charges interest on outstanding tax balance

The IRS treats the outstanding (underpaid) tax balance as a loan. That means that you will pay between 4 and 6 percent in interest charges, in case your corporate taxes aren’t completely covered.

Using an appropriate business loan will save you the trouble of dealing with the IRS later in the year, and (unlike the IRS), you would be eligible for a write-off in the coming year.

 

Extra Penalties

In addition to the accrued interest, the IRS imposes on late payments. There are steep penalties that you may have to pay in addition to the interest charges. Many sources online suggest that companies should seek a business loan a few months prior to tax season so that they have emergency access to money.

Our article outlines various sources of working capital loans that you may consider depending on the amount you need, available resources, and timing.

 

More punishments from the IRS

As we mentioned earlier, any outstanding tax balance would be treated as a loan. Besides all other penalties, the IRS can issue a tax lien on your business or even personal taxes and claim them in place of the missing amount.

As an extra spoke in your wheel, tax liens usually have a quite severe impact on your credit history. It can drive down your business and personal credit, making it harder to secure beneficial credit in the future.

 

What can you do?

Fortunately, our Unsecured Working Capital Program is one great way to help you do business with confidence this Spring! Unsecured money is the easiest to get and poses zero risks to your company’s assets.

You can get the funds on the next business day!

Need to pay business taxes? Apply now and get up to $250,000 within 24 hours!