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Video instructions and help with filling out and completing What Form 4797 Asset

Instructions and Help about What Form 4797 Asset

Today's Tuesday tax tip has to do with appreciable assets for the many small business owners and home-based business owners out there that may not be aware of it 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 would have to be depreciated over a number of years in other words furniture desk chairs tables would normally be 7-year assets meaning you purchased the table for fourteen hundred dollars if you use straight-line depreciation divided by seven years you would take two hundred dollars a year computers printers telephones anything electronic typically has 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 the normal depreciation there's a couple of other things that you need to be aware of one accelerated depreciation there is a method out there and and the calculation itself is a little beyond the scope of this video but the basics to keep in mind or that depreciation is larger in the earlier years and smaller in the later years and the reason for accelerated depreciation is it was originally thought that a machine works best when you first get it so it's worth more in the beginning years so that's something to keep in mind for your tax return and the other bigger item to keep in mind is section 179 section 179 is a code put in place by the IRS which allows you to deduct the cost of a fixed asset all in one year so in other words 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 one year under code section 179 currently you're allowed to do that with up to 25 thousand dollars worth of assets the last few years though that number has typically been five hundred thousand it's very possible that the government will extend this undertook to 500,000 by the end of December however they currently have not they're still talking about it and I realize you know they're still talking about it there's like six weeks left in the year but that's just the way the government works but without question you can at this point right off $25,000 or you can take an asset and depreciate it over its useful life very important this is a big deduction and it's important to keep in mind and it's an area that is a little confusing so you may want to talk to a tax professional before attempting to depreciate something but it's definitely something you should keep in mind and it's a way to have you keep a little bit more of the dollars you make rather than the government hope this tip helps you out see you again next week.

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