New IRS rules provide for a “de minimis safe harbor election”

New IRS rules provide for a “de minimis safe harbor election”

which is a new opportunity to increase your deductions and lower your taxes. It allows you to write off or expense certain items that you purchase that would otherwise have to be capitalized and depreciated over several years. You can expense purchases of items of tangible personal property costing up to $500 if you meet the following requirements: You must have an accounting policy in place at the beginning of your company’s year that treats such items as expenses on your company’s books and records. The accounting policy should be in writing. You must follow through and actually treat such items as an expense on your books and records. The de minimis safe harbor is an election that is made annually on the tax return. An election statement must be included with the return.

What you need to do is:

Put in place a written accounting policy for the de minimis safe harbor. When you purchase items of tangible property with unit costs of $500 or less, code the costs through an appropriate expense category. Examples of such tangible personal property might include computer printers and monitors, where each printer or monitor costs $500 or less. If you purchase multiple items on a single invoice, single items qualify if they each cost $500 or less, even though the total invoice is for over $500. We can provide a written accounting policy for you for a minimal fee, and help you execute the plan to save tax dollars.