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What is the De Minimis Safe Harbor?

The minimis safe harbor election allows small businesses to deduct expenses that might otherwise need to be capitalized. Think of the amounts paid for things like computers. Under the safe harbor election, you might be able to deduct the entire amount in a single year.

With an applicable financial statement (AFS) a tax return can deduct amounts paid for tangible property up to $5,000. Without this applicable financial statements cover, the de minimis safe harbor deduction amount is $2,500. The safe harbor threshold was only $500 before 2016. There can be some overlap between federal and state government reporting requirements. The specified dollar amount also varies from country to country. Here’s some info on avoiding paying duties when you stay inside the de minimis safe harbor value.

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