Combine EHR Incentives & Tax Code 179 Benefits and lower costs
With the recently passed American Taxpayer Relief Act of 2012 (also known as the Fiscal Cliff Act), there have been significant changes to Tax Code 179. By combining tax incentives and EHR Incentives for demonstrating Meaningful Use of certified EHR software, eligible providers can reduce (and in some cases eliminate) out of pocket costs.
Tax Code 179 – 2012 & 2013
- Practices can expense the full cost (up to $500,000) of equipment/software purchases by 12/31/13
- So if you buy $75,000 worth of equipment/software, you can expense the full $75,000 to reduce your taxable income!
- Let’s say taxable income was $100,000 prior to using Tax Code 179.
- Now, with the $75,000 expense, the taxable income is only $25,000
- Any amount purchased over the $500,000 limit can typically be depreciated over the next 5 years
The 2012 Tax Code 179 cap amount was $139,000. It has been raised retroactively to $500,000.
- This means that when you file tax returns for 2012, you can now write off up to $500,00 (plus 50% bonus depreciation above $500,000) in equipment/software purchases rather than being limited to $139,000.
The 2013 Tax Code 179 cap amount is $500,000 with a bonus depreciation of 50% for every dollar spent over $500,000 up to $2,000,000.
- This means that you can continue to write off purchases of equipment and software in 2013.