If you are self-employed or an independent contractor (your pay gets reported on a Form 1099-NEC rather than a W-2) then you can certainly deduct the cost of tools and supplies as a business expense.
- Under the Business tab, select Business expenses > Other common business expenses;
- Scroll down to Supplies;
- This will take you to a screen where you may list categories of supplies (i.e., hand tools, supplies, etc.) and the associated amounts.
If you are an employee (pay is reported on Form W-2), you can claim those tools and supplies as an unreimbursed employee expense on Schedule A. This will only be a benefit to you if you itemize your deductions rather than taking the standard deduction.
-Further, unreimbursed employee expenses are subject to the 2% rule, meaning that you can only deduct the portion of the expense that exceeds 2% of your Adjusted Gross income.
For more information, please see IRS Pub. 529 Miscellaneous Deductions.
