Yes, you can deduct it as a business expense in 2021. You will be listing your business expenses on Schedule C. However, the computer which you purchased would go under the Assets category in Schedule C
To input business expenses on Schedule C, please follow the steps below:
While inside the software and working on your return, type Schedule C in the Search at the top of the screen (you may see a magnifying glass there). There will be a popup that says Jump to Schedule C. Select that to get to the general area.
- Business Income and Expenses
- select Edit next to your business (if it is there)
- scroll to Business Assets
It will ask you to Describe the asset and since its Computer, you would put it in the "Computer, Video, Photo and Telephone Equipment" Category. It will then ask you about the cost and date of purchase and you can put in that info.
It will then ask you whether you purchase the laptop as New or Used. Further, it will ask you the usage percentage of this asset. Based on your question, you would mark No when it asks you if this item has been used 100% for the business since you acquired. Further, you can indicate that this was used for personal purposes initially. Then you can type in the start of business date and the percentage usage in 2021.
Once you input, that would will have to make a decision:
1) You can either choose "Special Depreciation Allowance" which will allow you to take the entire deduction in 2021.
2) You can say no to the Special Depreciation Allowance and take the depreciation for the computer over 5 years. This means every year you can take a depreciation expense deduction for the next 5 years.
