Daycare Tax Tips

Bonus Depreciation Rule extended for 2010

A help to family child care providers and other business owners

On September 27, 2010, President Obama signed into law the Small Business Jobs Act. Among other things, this act extends bonus depreciation to 2010 business purchases. Bonus depreciation is also allowed for 2008 and 2009.

Child care providers and other business owners who buy items in 2010 may be eligible for a special 50% depreciation allowance. This allowance allows providers to deduct 50% of the business portion of the item in 2009 and depreciate the remaining 50%, thus creating a much higher business deduction this year.

Property that is eligible for this special allowance includes: computers, office equipment, furniture, appliances, play equipment, fences, driveways, and a car. The purchase of home improvements or a home does not qualify. The item must be purchased new in calendar year 2010 and used in your business this year. The purchase of a used item does not qualify.

If you are planning to purchase an eligible item this year, this new 50% depreciation allowance will help you reduce your taxes in 2010. However, it is never a good idea to purchase something just because you can get a significant tax deduction. The amount of the tax deduction you will get by purchasing something will never be equal to the cost of the item to you.

This information was originally provided by Tom Copeland in the October 2008 Newslink newsletter from Resources for Child Caring, which provides some examples of how this special allowance works.

Last updated 19 May 2011

Posted on 2010-11-04 22:19:03