The tax season is near. And, it’s always a good idea to start your business tax planning early. Here’s some insight into how to depreciate your corporate office furniture, and why it’s a great idea to claim this furniture on your taxes.
Get to Know the Rules
Firstly, you can only deduct the amount you spend on modern office furniture for your business. This is especially important for the owners of a small or home-run business to remember. An item must be used more than 50% of the time for business purposes to qualify. That being said, there’s a lot of furniture and equipment that you can claim for. This can include modern office workstation desks and modular office workstation furniture as well as computers, printers, shelving, carpets, and filing cabinets.
Why Should I Depreciate Office Furniture on My Taxes?
It takes a little more work for you or your tax specialist. But, it’s worth it because you receive a tax deduction as a result. It not only lowers the amount of tax you pay in that year but also increases your net income after tax. A win-win!
Corporate Office Furniture: Expense or Asset?
There’s quite a bit of accounting tax lingo here but bear with us – it’s worth it!
Section 179 of the IRS Tax Code:
This allows businesses to deduct 100% of the cost of fixed assets up to $500,000. For example, if your business is currently in the 45% tax bracket, and you buy $10,000 worth of corporate office furniture, you’d get a tax saving of $4,500. So, your real spend on office furniture would be just $5,500.
If you spend over $500,000 in capital expenditures, the 30% bonus depreciation rule applies. This means that you can depreciate your corporate office furniture bought in 2019 that’s included in that year’s capital expenditures by 30% for additional savings.
Your tax deduction should be recorded in IRS form 4562, not Schedule C for profit and loss. You can look up the MACRS Depreciation model in the IRS publication 946 to see exactly how your office furniture depreciates over the next few years.
Refit and Refurnish Your NJ Offices with High-Quality Corporate Office Furniture Today!
The BE Furniture team in New Jersey is specialists in corporate office furniture. We can help you create a functional and appealing office space that supports your organizational goals for productivity and employee engagement. In addition to our wide range of office furniture, including modern office workstation desks and modular office workstation furniture, we can also assist you with expert workspace design, fitment, and used office furniture removal and recycling.
For more information on our services, please contact us today or visit our website at https://www.befurniture.com/