The end of the year is upon us, and that can only mean one thing. Everyone looks forward to the joys of turkey dinners and Christmas festivities. However, for most of us who run or own businesses, the end of the year means we need to start thinking about taxes.

Most of us are familiar with the most common tax deductions. Some of us even keep careful track of expenses and receipts to make paperwork easier. Many small business owners, especially physicians, may not be aware of the deductions Tax Code 179 offers.

Section 179 of the Internal Revenue Code allows a sole proprietor, partnership, or corporation to deduct up to $250,000 for software and equipment purchased before the end of the year. Under normal circumstances, commercial property that has a useful life of more than one year must be deducted over several years, accounting for depreciation. However, Tax Code 179 will allow companies to deduct the total cost, up to $250,000 in the same year it was purchased.

$250,000 is a large deduction and should fully cover the cost of any EHR system for small to medium practices. Another benefit of Tax Code 179 is that it will reduce the effective cost of your EHR system. For example, if you purchased a $23,000 system and your tax rate is 35%, you could save $8,050 in actual income taxes. This would bring the actual cost of your system down to around $14,950.

One thing to note is that the exemption does not carry over every year. Previously, the exemption was only $25,000. The current exemption is $250,000. However, there is no guarantee that it will take effect next year, particularly with the expensive bills Congress is passing.

Physicians who have already purchased an EHR this year should check with their accountants to see if they can take advantage of this large deduction. If you haven’t purchased an EHR yet, it’s not too late. I understand that doctors may not want to purchase an EHR during the holidays when budgets are tight and incomes are low. However, purchasing an EHR now offers several benefits.

Many medical software finance companies offer three-, six-, and nine-month deferred payment plans. That means you can have your system up and running this year, which is required by Tax Code 179, and you won’t have to make any payments until next year. Deferred payments eliminate additional expenses, while your income may decrease due to training and implementation.

Another reason to buy before the end of the year is to avoid the market rush due to the HITECH stimulus package. Analysts predict that physicians will rush to buy systems early next year to qualify for the stimulus money offered in 2011. Be sure to get in before the race so you have plenty of time to implement your EHR.