Tax relief benefits of photocopier leasing

Business firms looking for a copier machine to enhance the value of services they provide should consider photocopier leasing. Being an economical solution to buying a new expensive copier, leasing is suited to every business firm be it a fortune 500 company or a start-up firm. The main advantages are obviously the capital cost savings of the company, easier upgrading when new copiers arrive in the market, and the tax relief benefits.

The Internal Revenue Service (IRS), which is the US government agency responsible for tax collection and tax law enforcement, does not consider equipment operating on lease to be coming under direct tax but as a tax-deductible overhead expense. The payment you are giving for lease need not be included in your corporate income and hence the lease equipment is not being taxed.

The tax relief benefits from IRS are only applicable if the end-user has an agreement with the firm, lending equipment such as a copier. The lessee is usually provided the option for purchasing the equipment in its FMV (Fair Market Value) at the end of the leasing period. During the lease period though, the lessee does not own the equipment and does not record it on the balance sheet as an asset or a long term liability. The equipment leased is treated as an operating expense in the off-balance sheet and is hence 100% tax deductible, up to a specified limit.

By leasing costly equipments such as photocopiers whose tech specs keep updating rapidly, your company is saving on capital costs, maintenance, upgrading and taxes to a large extent, which contributes significantly to the stability and efficient performance of the company.

The recently modified IRS Section 179 allows business firms to write off a sum up to $108,000 for equipments which are leased. It will be a good idea for companies to consult their tax advisor to check out the various tax relief benefits of leasing photocopier and other equipment before striking the deal.