As of Jan. 1, taxpayers in 2014 are no longer able to take advantage of the $500,000 limit for Section 179 deductions. The limit has retreated back to $25,000 after political inaction let the extended limit expire at the end of 2013. However, there is a bill in Congress that seeks to extend the 55 tax provisions that expired when 2014 started, of which the 179 deduction’s expanded limit was one.
It is not clear when or how likely the provisions will be extended. If Congress disagrees on just one of the 55 provisions, then the process of passing the bill could go on for a long time, according to Forbes. Fortunately, in the past, Congress has allowed tax incentives to extend retroactively. In such a case, taxpayers can file an amended return for a year that has already passed, and they will get the savings owed to them from a previous year in the current year.
This hasn’t stopped people from complaining about it, however. Some say that the uncertainty is making it too hard to plan things as a business.
Rachelle Bernstein, vice president and tax counsel for the National Retail Federation, told CBS News, “It’s a totally ridiculous way to run our tax system. It’s impossible to plan when every year this happens, but yet business has gotten used to that.”
Other tax incentives that have been phased out in 2014 include the option to deduct either sales tax or state income tax as an itemized deduction and tax-free IRA contributions to charity.
It’s worth noting Forbes states the chances of the bill passing and section 179 depreciation returning to it’s full $500,000 limit are slim, unfortunately, but still possible.
Even with the limit back to $25,000, there are still many tax savings to take advantage of. Equipment leases are generally tax deductible under 179, so you will still be able to deduct up to $25,000 of your equipment lease payments in 2014. You can also deduct 179 depreciation related to vehicles, tangible property, computers, office furniture, and property attached to your building that is not a structural component (i.e. large machinery), according to Section179.org.
If you want to take advantage of a 179 deduction, consider equipment leasing with National Funding. They also offer a cash advance for business growth.
