Today's Tuesday tax tip has to do with appreciable assets for the many small business owners and home-based business owners out there who may not be aware that the IRS allows you to deduct certain furniture and equipment on your tax return. However, these items are typically not deducted all in one year; they would have to be depreciated over a number of years. In other words, furniture, desk chairs, and tables would normally be 7-year assets. For example, if you purchased a table for fourteen hundred dollars and used straight-line depreciation divided by seven years, you would take two hundred dollars a year. Computers, printers, telephones, and anything electronic usually have a five-year life. So, if you bought a computer for let's say eighteen hundred dollars, you would wind up deducting three hundred and sixty dollars a year for the next five years. In addition to regular depreciation, there are a couple of other things you need to be aware of. One is accelerated depreciation, which means that depreciation is larger in the earlier years and smaller in the later years. The reason for accelerated depreciation is that it was originally thought that a machine works best when you first get it, so it's worth more in the beginning years. This is something to keep in mind for your tax return. The other important thing to keep in mind is section 179. Section 179 is a code put in place by the IRS that allows you to deduct the cost of a fixed asset all in one year. So, if we have that fourteen hundred dollar table that we purchased, under section 179, as long as the fourteen hundred dollars does not exceed our income and put us into a loss, we're allowed to deduct all fourteen hundred dollars in...
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Video instructions and help with filling out and completing What Form 4797 Asset
