As outlined the US Tax Code Section 179 affords small and medium size business the opportunity to expense capital equipment, hardware and software purchases up to $250,000 in 2009 (for details click here)

So, How Does Tax Code Section 179 Apply to Your Practice?

SIGNIFICANTLY! The Economic Stimulus Act of 2008 increased the small business expense for qualified property in 2008 to $250,000. The Section 179 deduction has been extended through December 31st, 2009.

Expense 100% of your equipment/medical software purchase up to $250,000 provided it is purchased by 12/31/2009. Prior to the Economic Stimulus Act, the expense limit was $128,000.

In addition to the 100% deduction for the first $250,000. You can receive an additional 50% discount over $250,000 (see example 2 below).

For example, your practice can expense the full amount of the EMR software purchase including software and hardware - and reduce your practice's taxable income.

If your taxable income is $100,000 prior to your EMR purchase of $50,000, your taxable income is reduced to $50,000. Typically your practice can depreciate any medical software or hardware that exceeds $250,000 over the next 5 years.

Examples of Cost Savings under Section 179 in 2009

1. Example 1

   Purchase Price: $150,000

   Write Off Amount? The FULL $150,000.

2. Example 2

   Purchase Price: $300,000

   Write Off Amount? $250,000.

   50% Bonus Write Off of $25,000

   1st Year Total Write Off is $275,000