How Does Office Fitness Figure Into Your Income Tax Strategy This Year?
Whether you’re debating which sit-stand desk or treadmill desk model to spend your tax refund on or thinking of ways to reduce your next tax bill by investing in new office equipment, now is the best time of year to take the plunge. If you operate a business or earn a significant portion of your living working from your home office, your purchase of a standing desk or treadmill workstation is likely to be 100% tax deductible.
Of course, it’s always best to verify this with your own qualified tax professional. Here are some additional things to ask about if you’re looking to acquire office-fitness equipment as a business:
IRS Section 179 Accelerated Depreciation
In the past, each year Congress used to let the Section 179 economic stimulus program sunset, only to bring it back at the very end of the following year. Recently Congress decided to stop the roller-coaster and locked down the Section 179 deduction limits to $1,000,000, and the capital equipment spending cap to $2,500,000. Typical limits prior to 2018 had been between $25,000 and $500,000 so this is definitely a dramatic increase intended to stimulate capital equipment spending in this tax year.
The problem is, Section 179 only applies to new equipment put into use in the current calendar year, which would be fine if Congress would give buyers enough of a time window to actually purchase, receive and install the equipment before December 31st. As with many similar issues, this has not been their habit. Click here to learn everything you need to know about this year’s limits on Section 179 tax deductions.
Since desks and treadmill bases can sometimes take a few weeks to ship (especially in the peak season of December, when popular fitness-related products are often back-ordered), it’s important not to wait until too late in the year to buy if you want to benefit from the accelerated depreciation in the current year.
Note: For Section 179 treatment the equipment must be depreciable under the Modified Accelerated Cost Recovery System (MACRS) and have a depreciation recovery period of 20 years or less. So, buildings aren’t included but office furniture definitely is.
Employees’ Home Office Expenses
If you’ve provided any remote or hybrid employees with any home office upgrades, they should be entirely expensable in the year put into service under Section 179. While computing equipment is typically tracked as an asset, furniture provided to employees is often forgotten when it comes to asset tracking and tax deduction potential.
If you’re an employee, this is also a good thing to point out to your employer, who’ll be able to get some offset from the investment in your home office upgrade.
Leasing vs. Buying
If you’re purchasing more than $10,000 worth of equipment, consider leasing instead of buying. Numerous leasing configurations are available, and lease payments are 100% expensable.
Personal Home Office Deduction
If you’ve gone out of pocket for any home office upgrades, such as a standing desk, treadmill desk or even an ergonomic office chair, that should be deductible so long as it’s in a dedicated area of the house that’s specifically where you do your work. Talk to your CPA about how many years you’ll need to amortize these purchases by or if they can be expensed entirely in the year purchased.
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