De Minimis or 179 Expensing or Bonus Depreciation?

Before tax reform, many Chicago small business tax preparation pros thought that the de minimis safe harbor election was the best way to immediately expense the entire cost of your small-business assets for federal income tax purposes.

Now that the Tax Cuts and Jobs Act tax reform gives you 100 percent bonus depreciation through 2022, you have three possible reasons to use 100 percent bonus depreciation as your federal income tax default expensing method:

1. If you are filing Schedule C for your business activity, there is no self-employment tax on the sales proceeds.
2. It’s an easy method. You face none of the de minimis rules.
3. There are increased Section 199A deductions in certain cases.

Before deciding on the best method for federal tax purposes, make sure to check on how your selection will affect your property taxes and what that does to your net savings.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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