2009 Tax Deduction Benefits

 2009 Tax Deduction Benefits

Take advantage of this unique opportunity

New tax laws designed to stimulate economic growth have made 2009 the best time in years to buy EMR software.  Medical practices can realize huge tax savings if they purchase their EMR software in 2009.

Tax Deduction Limits Increased

Under the Economic Stimulus Act of 2008, the deduction limits for all qualified purchases made in 2008 was increased from $128,000 to $250,000. The Economic Stimulus Act of 2009 extended this tax code (Section 179) one more year to include all qualified purchases made through December 2009. This allows medical practices to expense the full cost (up to $250,000) of their EMR and computer equipment that is purchased by 12/31/09, rather than depreciating it by a set percentage over a period of years.

Example:  If your practice’s taxable income is $100,000 prior to your purchase, and you purchase software and hardware for $75,000, you just reduced your table income to $25,000.  In addition, you still qualify to receive the stimulus bonus of $44,000 to $65,000 per eligible provider from Medicare or Medicaid.

50% Bonus Tax Deduction

Even more, the Stimulus Act also offers a 50-percent 'bonus depreciation' on the amount of the purchase that exceeds $250,000 up to the $800,000 total purchase limit. Then you can also deduct the normal first-year depreciation on the remaining 50 percent.  Any amount exceeding $800,000 will be reduced dollar-for-dollar for the excess.

Example:  If you purchase software and hardware in 2009 for $300,000, you can write off the first $250,000 in the same year, plus 50% bonus write off of $25,000.  So, you can reduce your 2009 taxable income by $275,000, and then depreciate the remainder $25,000. In addition, you still qualify to receive the stimulus bonus of $44,000 to $65,000 per eligible provider from Medicare or Medicaid.

EMR Software is Qualified

Only certain types of equipment qualify for the deduction, but off-the-shelf computer software, such as Abraxas software products is considered eligible for the deduction, provided you purchase and install the software between January 1st and December 31st, 2009.

Purchased, Leased or Financed…Qualified

Section 179 applies to equipment both purchased and leased during 2009.  In fact, if leased, the money you save through these deductions can actually exceed your lease payments for the year. With a non-tax capital lease, you can buy EMR & practice management software and write off up to $250,000 of equipment for 2009, without actually spending $250,000 in 2009. Even if you obtain a loan for your electronic medical records system using an Equipment Finance Agreement (EFA), you can still take the Section 179 tax deduction.

Does it sound too good to be true?

It may.  But it is true.  To confirm, please consult with your tax advisor.

You can also go to: www.section179.org.

Will it be extended beyond 2009?

There is no guarantee the legislation will be renewed in 2010 and beyond.  So, if you're considering purchasing software to fulfill the government mandate for EHR or simply to increase your efficiency, this year might just be the best time to do it.

How can Abraxas Help?

Abraxas can help you maximize your tax deduction for your software and hardware purchase, if you act now.  To take advantage of the section 179 of the IRS Tax Code, described above, your purchase needs to be finalized in 2009.

In addition, we can help you receive your e-prescription bonus and stimulus incentive of $44,000 to $65,000 per eligible provider.  Call us now:  (877) 777-6500

This information is only a brief summary of the tax code and is not exhaustive. Make sure you consult a tax professional to see if your practice qualifies before taking any action.