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Your Tax Incentives Have Never Been So Valuable!

Issue: Summer 2013
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shutterstock 580461281-220x220.jpg Your Tax Incentives Have Never Been So Valuable!
There is a great benefit to you, your patients, and your team when you increase your practice’s aesthetic appeal, efficiency, and effectiveness. You will experience increased profitability when you are able to focus on delivering an even higher quality of care to your patient base. If you are a health care professional who is thinking of starting, growing, or remodeling an office or going digital, you may be able to do so more affordably in 2013 than ever before. What makes this a highly desirable environment?

  • Higher tax rates than prior years make all deductions more valuable
  • Record high dollar level of Section 179 benefit
  • Ability to quickly and conveniently secure attractive fixed-rate financing
  • Specialty lenders are offering 100% financing as well as long-term deferrals for equipment or technology (so your practice can benefit before any payments are required)
Top Federal Tax
Bracket Rate
Section 179
Deduction Benefit
2013 39.6% $500,000
2012 35% $139,000

Section 179 Fundamentals

It is never too late or too early to do business tax planning. The best time to tackle tax planning is mid-year because you still have time to put strategies into action. It is suggested that your tax planning goal is to (a) minimize income, (b) maximize expenses, and (c) take advantage of tax credits (Perez, 2011).

The Section 179 tax deduction is a federal IRS tax code rule that allows businesses to deduct all or part of the purchase price of certain qualifying business purchases (equipment, technology, and off-the-shelf software are usually qualified property). The 2013 Section 179 deduction benefit of $500,000 has never been higher. Bonus deduction applies up to $2,000,000.

Section 179 2013 2012
Equipment/Technology Software $300,000 $300,000
Section 179 Benefit $300,000 $300,000
50% Bonus Depreciation Available $30,500
Total First Year Deduction $300,000 $169,500
Potential Tax Bracket 39.6% 35.0%
Cash Savings $118,800 $59,325

As more and more practitioners embrace equipment and technology, the Section 179 benefit can be applied to lower the office’s taxable income, making a practice more efficient, productive, and profitable. But don’t wait too long to acquire technology or upgrade your office. Although it is true that you can have equipment placed in service until December 31, 2013, delaying your purchases may actually limit your options as product supplies diminish throughout the year or become unavailable.

You owe it to your practice and yourself to evaluate your opportunities and take advantage of Section 179.

About the Author: Keith Drayer is Vice President of Henry Schein Financial Services (HSFS). HSFS helps healthcare practitioners operate financially successful practices through our diversified suite of financial and business resources. HSFS’ portfolio of resources is designed to give our customers the financial advantage critical to success in today’s changing marketplace. You can reach HSFS at 1-800-443-2756 or hsfs@henryschein.com.