Depreciating Office Furniture on your Taxes
Tax season is quickly coming to an end, which means its not too soon to start planning for next year. Maybe you’re looking to purchase office furniture for your business this year, or maybe you’re just looking to depreciate office furniture on your taxes from last year. Allow us to give you a couple of examples of why its a good idea to claim business furniture on your taxes, how to claim new furniture as a business expense, and how to depreciate new office furniture on your taxes.
Is Office Furniture an Expense or Asset?
This can get complicated, but bear with us while we get a little heavy on the tax lingo for a bit. We have some great hidden gems here to save your business some money while spending some money by taking a look at some of the tax laws.
Spend Money, Save Money
In case you didn’t know, there’s a great little section of the IRS tax code called Section 179, which allows businesses to deduct 100% of the cost of fixed assets up to $500,000. So, assuming your business is in the 35% tax bracket, buying $10,000 worth of office furniture and deducting 100% of that under Section 179 would yield a tax savings of $3,500. So the net cost is actually $6,500! Good deal, right?
Image Source: www.section179.org
Bonus Depreciation Rule
For businesses that exceed $500,000 in capital expenditures, there is a 30% bonus depreciation rule allowing 30% of the cost of an asset to be depreciated in 2019. So, if the $10,000 of furniture was part of capital investments above $500,000, there would be an additional $3,000 of depreciation allowed for 2019 on that furniture.
Calculating Tax Deductions
So now that we armed you with the great tax savings you can use for your business taxes, how do you start to figure all of this out for yourself? Well it just so happens that we have a helpful tax deduction calculator to help you figure out those deductions. You can also find the IRS form 4562 here, which is required to fill out either way you choose to claim your furniture on your taxes. If we can help you with finding furniture at all, feel free to give us a call at 214-349-3000. We’d love to help!
Disclaimer: Please consult your tax advisor for tax advice.