Small Business Tax Breaks

Two tax breaks set to expire on December 31 can be a big help to medical practices. One allows for direct expensing of up to $250,000 in purchases, while through the other you can depreciate up to 50% of the cost of new equipment.

In an effort to pump up corporate spending, Uncle Sam put a couple of tax breaks in place that can be a big help to small businesses, a category that fits most medical practices. Time is running out on these perks, however, since they are scheduled to disappear on December 31 of this year.

If you’re looking to buy things like medical equipment for your practice, you can take what’s known as a Section 179 deduction to directly expense up to $250,000 of whatever it costs on your 2009 tax return, instead of depreciating the cost piecemeal over several years. The tax break also applies to items like furniture, computer systems, and software, and it doesn’t matter if the stuff is new or used. The second tax break, which applies only to new equipment, is a bonus depreciation on qualified items. Under this temporary change in the tax law, you can depreciate up to 50% of the cost of equipment put in place between now and the end of the year.

Depending on the state of the economy as the new year approaches, there is a chance that these tax incentives will be renewed, but tax experts caution that it’s probably best not to count on that happening. And, as with anything that has to do with the tax code, they strongly advise small businesses to consult their accountants or tax advisors before making any decisions.