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Daycare and Taxes All things related to Taxes and running a Daycare post here. Topics of tax exemptions, forms, filings, tax write offs, IRS etc.

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Old 03-22-2019, 09:32 AM
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Reimel61 Reimel61 is offline
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Default Difference Between De Minimis Safe Harbor Election and 179 Rule??

what is the difference between the de minimis safe harbor election and the 179 Rule deduction???

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Old 03-22-2019, 11:58 AM
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Default section 179

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Originally Posted by Reimel61 View Post
what is the difference between the de minimis safe harbor election and the 179 Rule deduction???

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The de minimis safe harbor rule allows you to deduct any expense under $2,500 in one year (100% business or shared). Any expense over $2,500 can also be deducted in one year (exception - home, home improvement and home addition). If you sell these items before the end of the normal depreciation period of 5, 7, or 15 years, you'll have to pay back some of the deduction.
Section 179 only applies to items used more than 50% in your business and excludes land improvements, home, home improvements and home addition. You can deduct the business portion of these items in one year. However, if you stop using them ore than 50% of the time or go out of business before the end of the normal depreciation period, you will have to pay back some of the deduction.
Therefore - it doesn't make sense to use the Section 179 rule anymore because of the potential payback later. You can use the de minimus rule and go out of business and not worry about a payback, whereas you will owe taxes if you used the Section 179 rule.
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Old 03-26-2019, 06:23 AM
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