Section 179 is a tax deduction for businesses. In today’s blog, we will take a deeper look at exactly what this means and how your pharmacy might be able to take advantage of this tax provision.
What is Section 179?
Section179.org does a great job explaining the deduction and what is involved. Below are a few key items from their site.
-Section 179 is a tax code created to help businesses. By allowing businesses to deduct the full amount of the purchase price of equipment (up to certain limits).
– Section 179 is valid on most types of equipment. There is little sense in allowing a deduction on only obscure equipment, so Section 179 is aimed at general business equipment as well as off-the-shelf software.
– Section 179 can greatly help your bottom line. By deducting the full cost, you lower the amount you pay for equipment and/or software substantially. And these benefits can be further expanded if you choose to lease or finance your equipment & software.
– Section 179 is simple to use. All you need to do is buy (or lease) the equipment and use a special IRS form. That’s it.
– Section 179 enhancements typically expire at year’s end. The various Stimulus Acts over the past few years have included special provisions for Section 179 and Bonus Depreciation and greatly increased the limits on how much businesses could deduct. But the enhancements usually expire at the end of the year.
– To qualify for a Section 179 deduction, the equipment must have been purchased (or leased/financed) and placed into service by midnight, December 31st of the year you are taking the deduction for.
How can you leverage Section 179?
Purchasing a large item for your pharmacy can make a significant financial dent. According to RxSafe.com, regardless of the ultimate return on investment, the immediate purchase decision has to take the business’ cash position into account. Taking the Section 179 deduction is a huge help, and can significantly discount the purchase price of pharmacy automation equipment.
One item that qualifies is, “Off the shelf” software. Software must be custom-designed and available to the general public.
Software must meet these requirements:
– Purchased or financed with a specific qualifying loan.
– Used in your business for income-producing activity.
– Have a determinable useful life.
– Expected to last more than one year.
Other large expenses within the pharmacy may be covered in Section 179 as well. For a full list, visit section179.org or meet with a trusted financial consultant who is well-versed in this area.
Which Digital Pharmacist solutions can be claimed for deductions?
Investing in software like this is investing in your pharmacy. The benefits outweigh the cost, especially since you will be able to write off the costs in your taxes. If you are considering software with a short implementation to invest in by the end of this year or are considering this option for years to come, look into our products to help your pharmacy:
Digital Pharmacist can help with a wide range of digital marketing services and support, from Facebook advertising campaigns to social media posting to new customer tracking. Digital Pharmacist’s original content and curated health resources keep customers informed and educated while positioning pharmacies as experts who care.
A custom digital web and mobile experience so your pharmacy can care for patients, grow your business, and be found online.
Platform to develop task-based workflows that automate outreach and track prescription lifecycles, improve adherence and reduce your return to stock, organize and manage patient relationships and touchpoints effectively and securely from multiple access points.
Vow is the only all-in-one IVR communication system on the market that was purpose-built for pharmacies.
Please note that it is important to check with your advisor or CPA for guidance on which tax provisions your Digital Pharmacist products, as well as your other purchases and expenses, can be claimed for this year.
Here are some common questions summarized from the above and answered.
What is Section 179?
Section 179 is a tax code created to help businesses. By allowing businesses to deduct the full amount of the purchase price of equipment (up to certain limits).
What is Depreciation?
A deduction for the exhaustion, wear and tear of capital assets used in a business or held for the production of income.
What are the big differences between Bonus Depreciation and Section 179?
States handle bonus vs. section 179, so they can be different from federal; federal will always recognize but state won’t always recognize it. Writing off expenses to create losses is key difference and some other technical rules.
How should I prepare for Tax Day?
Make a list of any product purchased in 2022 that fits this description, keep proof that the products are being used and were started in this year and, not necessary but recommended, hire a financial advisor to help.