What is Section 179?
Section 179 is a tax code that allows businesses to deduct the full cost of qualifying equipment and software purchased or financed during the tax year.
- Section 179 applies to tangible personal property, such as machinery, equipment, and furniture.
- It also applies to intangible property, like software and patents.
Does Software Qualify for Section 179?
Yes, software can qualify for Section 179 deduction, but there are certain conditions that must be met.
- The software must be off-the-shelf or custom-developed for your business.
- It must be used for business purposes more than 50% of the time.
- The software must be purchased or financed during the tax year.
How to Claim Software Costs on Your Business Taxes
To claim software costs on your business taxes, you'll need to complete Form 4562 and attach it to your business tax return.
You'll also need to keep records of your software purchase, including:
- The date of purchase or financing.
- The cost of the software.
- The business use percentage.