Section 179 of the IRS Tax Code allows a business to deduct the full purchase price of certain types of financed or leased equipment and software for the current tax year. The American Recovery and Reinvestment Act of 2009 (ARRA), as well as other stimulus acts including 2013’s American Taxpayer Relief Act, have increased the Section 179 deduction limit, but this year is the last with the $139,000 limit; beginning in 2014, the limit is reduced to $25,000, so taking advantage of the deduction this year is that much more attractive.
With Meaningful Use Stage 2 going into effect on January 1, 2014, EHR software such as Lytec MD and Medisoft Clinical is being upgraded and re-certified by developers. In addition to these software upgrades, healthcare organizations may need to purchase new hardware, including servers or firewalls, in order to meet patient portal requirements for MU or to safeguard Protected Health Information under the recently-released HIPAA Omnibus Final Rule. End of support for Windows XP is also coming up, in April 2014, and many workstations currently running XP may not be able to run Windows 8 and will need to be replaced. All these possibilities need to be considered against the backdrop of Section 179; if purchases will be necessary in the near future, how can the tax deductions be maximized?
Then there’s the Patient Protection and Affordable Care Act. Despite its imperfections, and despite numerous challenges and attempts to undermine it, “Obamacare” is the law of the land, and the expansion of states’ Medicaid eligibility as well as the creation of state-based health insurance exchanges will result in millions of newly-insured Americans taking advantage of healthcare. While signup delays and data center glitches have marred the rollout of the online exchanges since October 1st, the opportunity is not being ignored, and some healthcare providers can expect, and should prepare for, an influx of new patients.
The bottom line: to avail yourself of the potential savings through Section 179, eligible equipment and off-the-shelf software must be purchased or leased, and placed into service, between January 1st and December 31st, 2013. Careful planning now can put your practice in an excellent position come the new year, as well as save you some money.