ATA Partner, David Hart, CPA, CGMA, CVA, CFF gives a timely overview for business owners on 2020 tax planning. Watch the video to learn more key information on business depreciation and for an update on Section 199A Deductions.
For business owners who own equipment and heavy-duty vehicles, please keep in mind that up to $1,040,000 of qualified fixed asset additions can be expensed in 2020 under Section 179. This includes equipment, furniture, roofs, HVAC equipment, and security systems. Also, the first $18,000 of vehicles with a towing capacity of 6,000 pounds or less and the first $25,000 of vehicles with a towing capacity exceeding 6,000 pounds are eligible to be expensed under Section 179.
Bonus depreciation of up to 100% will also be allowed on equipment, furniture, and software placed in service during 2020. In addition, up to $18,000 of bonus depreciation is allowed on new passenger vehicles purchased in 2020.
Section 199A Deduction
Owners of partnerships, LLCs, S-Corporations, and sole proprietorships could be eligible for a deduction of up to 20% of qualified business income. It reduces taxable income whether or not you itemize deductions. Anyone with taxable income of $326,600 or less ($163,300 if single) is entitled to the full 20% deduction, and those with taxable income of up to $426,600 ($213,300 if single) are entitled to the deduction, subject to limitations.
Careful tax planning can help you maximize your depreciation deductions in 2020. Contact your ATA tax professional to assist you in maximizing these tax benefits.