Small Business Deductions with Bigger Payoffs, Thanks to Section 179
by Christina Lee on March 4th, 2009
The definition of what small businesses can claim on their taxes has always been pretty broad. In fact, it can easily sum up to just about any “ordinary, necessary, and reasonable expense,” as legal reference Nolo states.
But Section 179 of the Economic Stimulus Act of 2008 may allow for small business owners to get even more of their 2008 tax returns this year, especially if the following deductions are claimed:
- Computer software. Though small business owners once had to depreciate the costs of new software over three years, they can now fully expense new purchases during the same year, according to Bankrate.com.
- Meals. The Internal Revenue Service now allows for deductions of up to 80 percent of the meal cost, up from 50 percent, according to Bank of America’s Small Business Online Community. Of course, deductions can only be claimed if such meals are taken while traveling away from home and solely right before, after or during normal business hours.
- Mileage. While careful documentation is always required, this year it can result in a bigger payoff. The standard mileage deduction increased to 50.5 cents per mile for the first half of 2008, only to rise again to 58.5 cents per mile for the second half, according to the Small Business Online Community.
Small business owners: What other deductions should be made but are easily forgotten? Will Section 179 reduce any claims that you have to make this year?