Small Business Deduction Threshold Raised

Small Business Deduction Threshold Raised

The Internal Revenue Service (IRS) has made things a little easier for small businesses by raising the $500 "safe harbor" threshold for deducting certain expenses up to $2,500. This will allow small businesses (those that do not produce audited financial statements) to immediately deduct many expenditures, rather than depreciating them over several years.

The deduction must be substantiated by an invoice, and applies to money spent to acquire, produce or improve tangible property that would normally qualify as a capital item.

The new threshold takes effect starting with the 2016 tax year. However, the IRS says it will not challenge use of the new $2,500 safe harbor threshold used in years prior to 2016. For taxpayers with an applicable financial statement, the de minimis or small-dollar threshold remains $5,000.

If you have any questions about this deduction or any other tax issues, please contact Gray, Gray & Gray's Tax Department at (781) 407-0300.

We go beyond the numbers by delivering insight, guidance and success to our clients.

Gray, Gray & Gray, LLP
781.407.0300

www.gggcpas.com

STAY CONNECTED

The information contained in this communication (including any attachments and/or re-directs to other online sources) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.