This new law will result in higher tax deductions for you in 2014. It will also make it easier to avoid the complicated rules of depreciation.
To take advantage of this new law you must prepare the following statement and put in your tax records for 2014:
"Section 1.263(a)-1(f) deminimus safe harbor election - I am using the safe harbor rule under this Section for items I purchase for my business in 2014 that cost $500 or less."
Put the date your wrote down this statement, your address, your taxpayer identification number and sign it.
Using this new rule is voluntary. If you choose to use this rule you must deduct in one year all items you purchase in 2014 that cost less than $500.
In some cases providers may want to show a higher profit in 2014 and therefore may not want to elect to use this rule. Such providers might be those who are trying to qualify for a loan or providers who might show a loss.
But, for the majority of providers, this rule is a boon and I would urge you to prepare this statement now!
Don't miss this deadling! Prepare your statement by January 1, 2014!
For more information, see my previous article, "New Depreciation Rule for 2014 Will Save Providers Time and Money!"
Thanks to tax preparer Alison Jacks, EA.
Tom Copeland - www.tomcopelandblog.com
Image credit: www.manta.com
For more information about depreciation, see my 2013 Family Child Care Tax Workbook and Organizer (available January 15, 2014).