If the tools/equipment are hand tools, you can take their cost as a deduction under supplies along with the paper/ink, etc. These smaller purchases are handled as Expenses.
To enter these items, please follow these steps:
- Click on Income and Expenses and then click the Start/Revisit box in the Self-Employment section.
- On the Your 2019 self-employed work summary screen, click on Edit next to your business.
- You will be on the Here's your [business] info screen.
- Click on the box Add expenses for this work.
- On the next screen, Tell us about any expenses… mark the radio button next to Supplies and click Continue.
- Enter the supplies expense on the next screen.
If the tools/equipment are large purchases (typically more than $2,500 each) you can enter them as assets and depreciate them over time. Such items are used in your business for longer than a year. These items are tracked in the Assets section.
Depreciate the Asset
- If you have already added some assets, click on the Edit box next to Assets in the Expenses section.
- On the screen, Do you want to go directly to your asset summary? mark the Yes button and click Continue.
- On the Business Asset Summary screen, you can add, edit or delete assets already entered.
- If you haven’t yet entered any assets, click on Add expenses for this work.
- On the next screen, Tell us about any expenses… mark the radio button next to Assets and click Continue.
- Continue through the screens, entering the requested information.
