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Joor
Level 2

Expenses based on Expense categories

As I am entering in expenses for my business, I am unsure what categories my expenses fall under.  For example I purchased a professional microphone that I use on a daily basis for my business but when looking at expense types I'm not sure what category it falls under. Would it be an office expense, supplies or Asset? Would I describe it as a "Microphone".

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3 Replies
KrisD15
Expert Alumni

Expenses based on Expense categories

Enter that as an asset. 

You should then be given options on depreciation and "Expensing" the full cost using Section 179 Deduction. 

Use what makes the most sense in your situation. 

Bonus depreciation is only offered the first year the asset is put into service.

 

Yes, name it "Microphone 1" or the brand name so you can keep track of it if/when you get another. 

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Joor
Level 2

Expenses based on Expense categories

Thank you for the help and for the quick response! This is where things get muddied. If I enter it in as "Asset", it says "Based on the cost of the item, we recommend that you write off this item as an expense instead of an asset." It will allow me to continue entering it in as an asset but I want to make sure I am doing things right. I just want to make sure it's not supposed to be in one of the other expense categories. 

 

Another question. Should I be grouping items together? For example if I bought notepads and pens, should I group all the notepads/pens I bought throughout the year together and put them under one line item? 

 

 

AnnetteB6
Employee Tax Expert

Expenses based on Expense categories

Typically an item that is expected to last more than a year would be entered as an Asset and either be depreciated over a number of years or written off as a Section 179 expense through the Assets section.  

 

As for other categories of expenses, such as pens and notepads, things can be grouped together all as one entry.  Pens and notepads would be considered office supplies (or just supplies) for your business.  You could lump them together with other types of supplies that you used and just report one amount.  You can always make some notes to keep with your records showing the breakdown of the categories so you know where you get the total number that you are reporting on your return.

 

@Joor 

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