Small Business Owners - Faster Write-Offs for Certain Capital Expenditures
If you are a Georgia Small Business owner, certain tax incentives have been created, extended or expanded in the way of business tax deductions and credits under the American Recovery and Reinvestment Act (ARRA), enacted in February. The bonus depreciation and increased section 179 deduction, for example—are only available this year, eligible businesses only have a few months to take action and save on their taxes.
Many Georgia small businesses that invest in new property or equipment may be able to write off most or all of these purchases on their 2009 returns. The new Act extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction. The Section 179 deduction is so named for the relevant section of the Internal Revenue Code. After 2009, Georgia businesses will only be able to recover these capital investments through annual depreciation deductions spread over several years. Until then, Georgia businesses are encouraged to make investments by enabling businesses to write the investments off more quickly.
Under the current Act, the bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service. The section 179 deduction enables Georgia small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.
Bonus depreciation and the section 179 deductions are claimed on IRS Form 4562.
