Hopefully, by now you are making millions blogging! If not, I hope you are at least making enough money to pay for your hosting bill and any other fees you have. If you earn money by blogging then you will have to pay taxes on any profits. I have a B.A. in Business and have read several books related to tax accounting. My goal is to help readers understand small business taxes and maximize the deductions you can get thus lowering your tax bill.

What is Section 179?

Section 179 refers to the IRS tax code that allows businesses to deduct capital expenses (like computers, cars, equipment, etc) as an operating expense vice rather than depreciating equipment/property. Basically, you can deduct the full cost of equipment/property purchases in the year you buy it vice depreciating it over time. Before this tax code, small businesses were only allowed to take a portion of the deduction each year over the life of the equipment. For instance, if you bought a printer for $1,000 and estimated a 4-year life, you would be able to deduct $250 a year for four years. Under Section 179, you can now deduct the full $1,000 in the year you purchased it!

Before Section 179: a $1,000 printer purchase in 2008, deductions would be:
2008 - $250
2009 - $250
2010 - $250
2011 - $250

Now under Section 179, deductions is:
2008 - $1,000

What kind of items are deductible under Section 179?

You can deduct anything that is tangible property that you buy for your business that will last more than one year. If less than one year you still get the deduction, but it falls under operating costs (later article!). Here are some common examples:

• Equipment (printers, computers, etc)
• Office Furniture
• Software
• Vehicles

Common examples of what is NOT allowed under Section 179

• Buildings
• Land
• Inventory (you deduct cost of inventory as you sell it)

Section 179 Limitations

Section 179 benefits small businesses the most. Up until 2007, business could deduct up to $128,000 a year under Section 179. Thanks to President Bush, that limit rose to $250,000 under the Economic Stimulus Act of 2008. These are really only limitations if you are a big company that is spending more than $250,000 on tangible assets!

If you are making money make sure you deduct your server costs (operating expense) and equipment purchases like computers, routers and other tangible assets under Section 179!

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