Deducting Computer/iPad

[Ben092]

I know you can now deduct a computer or iPad below $2500 but I have a few basic questions.

Firstly, I know the computer or iPad has to be used in service of the business the majority of the time. I run a small sole proprietorship side business where I teach people how to use Mac equipment -- computers and iPads. This almost seems like a loophole. Of course I might do some directly business related work but everything I do on the devices, in theory, educates me and I pass that along to customers. Right now I teach people how to use iPad but I don't even own one so it makes sense to buy one to learn more through usage. Is this logic appropriate and ethical when it comes to taxes? 

Secondly, an even more basic question: do these types of deductions only deduct against my business tax liability or do they turn into a credit if they exceed my liability.

Thank you for the feedback! 

[SundayInSalem]

IRS allows a deduction for ordinary and necessary business expenses. If you use a computer or iPad for both business and personal purposes, you can only deduct the percent used for business, for example 80% if you used your iPad that much for business (generally not the full amount).

Learning how to use an iPad so you could teach others would be a business purpose, but only time spent on learning functions relevant to your teaching.

You can wait until you file your taxes before deciding on a business use percentage. At that time, you can look back and see how much time you spent learning and using your iPad for a business purpose.

Deductions are subtracted against business income. If you deduction produces a loss, the loss in subtracted against your total income.

An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

What Can I Deduct?

[leeloo]

It stands to reason that if you are teaching people how to use a device, you would need to know the ends and outs of the device. Imagine how poorly we would be able to guide you through the use of the TurboTax software, if we did not own it and play with the various permutations.

[Mike9241]

no portion of those expenses are deductible if you incur them as an employee - you get a w-2. the business portion would be deductible by an S-corp, C-corp, sole proprietor, or partnership and probably by a partner.

[Mike9241]

the same thing can be said about employees who need a car or public transportation to reach their place of employment. commuting expenses have never been deductible.   also, tax law changes in effect for 2018-2025, unless extended, deny deductibility by employees for any business expenses they incur. for example, a mechanic as an employee gets no deduction for the tools (s)he must but to do their job while a mechanic as an independent contractor gets a deduction. what some employers have done to work around these limitations for their employees is to set up an accountable plan. 

[leeloo]

Your post said, " I run a small sole proprietorship side business.".As an independent contractor, you are not an employee and are not subject to those restrictions.