Timing Purchases To Be Expensed

As long as you start using your newly purchased business equipment before the end of the tax year, you get the entire expensing deduction for that year, whether you started using the equipment in January or on December 31^st. This contrasts with the rules for depreciation which limit the amount deductible in the first year to the date when the asset was placed in service. The amount that can be expensed depends upon the date the qualifying property is placed in service, not when it's purchased or paid for.

Save Money If, toward the end of your tax year, you're thinking about purchasing equipment that you can expense, you may do well to complete the purchase and start using the property before the end of the year if you can benefit from deducting the property's cost on your current year's tax return. However, if you expect your taxable income to be much higher in the following year, you may want to hold off on the new equipment until the beginning of the next tax year.