Instead of setting up as an asset and depreciating it, you can make a De Minimis
Safe Harbor Election.
This election is an option you can take each year that lets you write
off items $2,500 or less as expenses instead of assets. Expenses
typically reduce your income by a larger amount than depreciating an
asset over multiple years does. This means you could get a bigger
refund.
Here are the rules you need to meet to take this election:
- You don't have an (most people don't).
- You have a consistent for how you record expenses and assets.
- You record these items as expenses on your books/records.
- The cost of each item as shown on your is $2,500 or less.
This
election for items $2,500 or less is called the De Minimis Safe Harbor
Election. If you decide to take this option, a form called De Minimis
Safe Harbor Election will show up in your tax return. This election will
apply to all your businesses, rental properties or farms.
To make this election, go to:
- Federal Taxes
- Wages and Income
- Under Rental Properties select Income and expenses from rentals, patents, oil/mineral rights (Sch C)
- If not already done, Answer the questions to set up your rental property and Continue
- At the Review Your...Rental Summary page select Sale of Property/Depreciation - click Start/Update
- Answer Yes to "Did you buy any items that each cost $2,500 or less in 2015?" Click Continue
- Answer Yes to "Let's see if you qualify to deduct these items as expenses?" Click Continue
- Next Answer Yes to "Do you want to take this annual election?" Click Continue
- Indicate whether or not Every or Some items cost $2,500 or less. Click Continue
- If some of your purchases cost more than $2,500, the interview will
take you through the asset entry, if not be sure to enter your items as other expenses in the main list of topics for your rental property.
