Smart Year-End Tax Moves: Section 179
Are you thinking about purchasing new equipment to offset income or to begin expanding your services to improve your business? Make the purchase and install it by the end of the year to qualify for a Section 179 deduction.
Why Leverage Section 179?
The tax code is certainly a beast that many of us never want to think about and yet if you understand it, you can take actions that will benefit you and your pharmacy. Pharmacy automation improves operational efficiency while also expanding services. An investment in equipment is often the best step to improving automation. You can leverage Section 179 to help attain pharmacy automation at the lowest cost is possible.
What is Section 179?
Section 179 refers to a tax deduction that allows businesses to deduct the full purchase amount of qualified equipment in one large deduction rather than having to slowly depreciate the equipment over many years. For tax year 2019, this allowance can be as high as $1,000,000. This deduction goes directly against any business income for this year and if your deduction is higher than your income, you can carry any remaining deduction over to future years!
What kind of equipment will qualify?
Equipment will qualify at any price point, there is no minimum purchase amount. It also does not have to be new equipment; it just needs to be new to you. Since this is a business deduction, the equipment must be used for business purposes more than 50% of the time. If you want to take this deduction in 2019, you need to have the equipment installed in your pharmacy by December 31, 2019.
Are there any changes coming for Section 179?
While we can’t predict the future, the Section 179 deduction seems to be secure but it’s important to note that significant changes in politics can affect the tax code. Section 179 was recently increased from a maximum of $500,000 to its current level of $1 million.
Section 179 at a Glance
- It can only be used to offset business income
- The equipment must be new to you
- It must be installed before the end of the year
- Maximum amount is $1,000,000 for 2019
- Any remaining amount not offset by 2019 income can be rolled over to offset 2020 income
RxSafe RapidPakRx Will Qualify for a Deduction
A popular piece of automation for independent pharmacies is the RxSafe RapidPakRx strip packager. Pharmacy owners choose this equipment because of its speed and small footprint. It also enables them to compete against Amazon PillPack by having their own compliance packaging service.
Priced at $175,000 ($165,000 for PDS members), it will certainly qualify for a Section 179 deduction as a business equipment purchase if installed by the end of the year. Time is running out but RxSafe still has the ability to take orders and get them installed before the deadline. If you would like to learn more about the RapidPakRx and how it can help you grow your business, please reach out to RxSafe here.
You can also learn more about Section 179 at RxSafe’s resource page.
Can you benefit from Section 179?
The answer is maybe. If you are getting regular monthly financials and having strategic calls with your accounting team then you probably know what your year to date income looks like. If you are not receiving accurate financials or pharmacy specific accounting advice, please reach out to our PDSfinancials team to discuss how critical financials are for you to make smarter business decisions and to operate your pharmacy at peak performance.
To help you get caught up with your 2019 financials, PDSfinancials is offering to rebuild your entire 2019 financials for free for all new PDSfinancials members in 2019 (a $10,000 value!). Even if you are not positive you have income to offset this year, you could still make those strategic equipment purchases that will help you produce a profit in 2020 because the Section 179 deduction is allowed to be carried over to future years’ tax returns.
You deserve to have the best insight into your pharmacy’s financial performance. Schedule a call with the PDSfinancials team to learn more.
