Equipment Tax Benefits
If you are a medical practitioner or a medical center such as a clinic, diagnostics centre or a hospital; you will probably know that how hard it can be to keep up with the new advances in medical technology. It’s very essential to have state of the art medical equipment, so that many new diseases and medical conditions can be diagnosed. Especially with the new breakthroughs in genetics and medical sciences, new equipment is introduced everyday for diagnosing illnesses and also for treating them. Of course, some equipment medical equipment like IV Pumps are never out of style and they can be used in any medical institution for years and years until they are worn out. So whether you opt for some new equipment that has just come out or if you are looking for classic equipment that needs to be replaced; chances are you will be faced with buying new medical related equipment every year.
However, many medical practices face the problem of too little cash and too much investment that needs to be done. Sometimes it might seem financially feasible to just buy or lease the equipment next year, as this year the business and the cash flow might have been slow. Well, there are several tax benefits of buying medical equipment before the end of the year; which will make purchasing the medical equipment more efficient.
Tax benefits of buying medical equipment before the end of the year starts first with the depreciation of the equipment. This is perhaps the simplest form of tax benefits for buying med equipment, as this benefit has been around for decades. Every time you buy any equipment before the end of the year; you can depreciate its value up to %50 on some equipment. Depreciation in essence means that you are able lower the value of your equipment by its usage and the number of years that it has been used. In essence, this means that you have bought something new and it has lost is value with usage and years. Therefore, you are able to reduce your taxes by depreciating and projecting this loss of value to your tax forms. This is something that can be used for any type of equipment; but especially for medical equipment, the tax depreciation benefits are larger. So not waiting for the next year and buying your medical equipment before the end of the year can be beneficial in terms of depreciation, as you will deduct some percentage (up to %50) this year and you will also depreciate some of the value next year (up to %10). Thus, you get benefit from at least two years or more when you buy the medical equipment before the end of the year. This is a very useful incentive for medical practitioners.
However, there is a major tax benefit that has been introduced by the US Congress couple of years ago. This allows you to save money by not depreciating just the small portion of your capital equipment expenses; but by deducting the full cost of the equipment (up to a total of a certain amount), so that you are able to get a real incentive for purchasing your medical equipment now, instead of waiting for the next year to come. This special tax benefit is called Section 179 of the US Tax code and it allows you to save a maximal deductible of $100,000 a year. In addition, the total investment that you are able to make through Section 179 has been increased to $ 400,000 per year.
So, the incentives outlined above make it really feasible to buy capital equipment before the end of the year. They are pretty good incentives and buying a medical equipment of even $ 100,000 can be deducted up to %100 with the depreciation incentives and with the Section 179 combined. This way you do not need to wait for next year for the cash flow to get better, as you will end up saving more this way. When you purchase medical equipment, the tax benefits of buying medical equipment before the end of the year will definitely cause you to pay lesser taxes, so that you get some of your money back in forms of taxes. This way waiting for the next year will mean that you end up paying more for the medical equipment, if you think about the taxes that you will end up paying. However for those medical practitioners who may have cash shortages and who are not able to buy their equipment; then you can think about leasing them as leasing the medical equipment will be 100% deductible from your taxes.