There are actually two similar elections you can take--the De Minimis Safe Harbor Election and the Improvements election.
For both elections each asset that you would normally depreciate over a number of years needs to be $2,500 or less.
The items in the "$20.00 to $50.00 range" would normally be taken as expenses, anyway. The elections apply to the assets you would normally depreciate, like carpeting, appliances, etc.
De
Minimis Safe Harbor Election
This election for
items $2,500 or less is called the 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.
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.
Here are the rules you need to meet to take this election:
- You don't have an applicable
financial statement (most people don't).
- You have a consistent process 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 receipt is $2,500 or less.
Improvements
Election
This election is an
option you can take each year that lets you write off some building
improvements as expenses instead of assets.
Here are the rules you need to meet to take this election:
-
Your gross receipts, including all your other income, are
$10,000,000 or less.
-
Your eligible building has an unadjusted basis of
$1,000,000 or less.
-
The cost of all repairs, maintenance and improvements is less than or
equal to the smallest of these limits:
-
2% of the unadjusted basis of your building or
- $10,000
This election for building improvements is called the Safe Harbor Election for
Small Taxpayers. If you decide to take this option, a form called Safe Harbor
Election for Small Taxpayers will show up in your tax return. This election will
apply to all your businesses, rental properties or farms.
To make either of the
elections please follow these steps:
Part 1. Make
the election
- Click on Federal
Taxes > Wages & Income [In TT Home & Biz: Business
> Continue > I'll choose what to work on]
- In the Rental Properties and
Royalties section, click the Start/Update
button.
- If you have already started
adding information about your business, you will be asked if you want to
review your rental and royalty information. Click the Yes box.
- When you come to the Rental and
Royalty Summary screen. Click on the Edit box next to the
property.
- If you haven't already started
adding information about the property, continue through the screens to
enter the needed information.
- You will now be on the Review
Your [property name] Rental Summary screen.
- In the Assets/Depreciation
section, click on the Start/Update box.
- When you come to the screen, Did
you buy any items that each cost $2,500 or less in 2015? mark the Yes
button and click Continue. (See Screenshot #1, below.)
- On the screen Let's see if you
qualify to deduct these items as expenses, mark both of the Yes
buttons and click Continue. (Screenshot #2)
- On the Now, let's review each
item you bought screen, mark whether all your new assets cost $2500 or
less. (Screenshot #3)
- If you mark that every item
cost $2,500 or less, you will be brought to the Rental Summary
screen. You have elected the De Minimis Safe Harbor provision. Proceed with Step 2, below.
- If you mark that some cost above
$2,500, you will be asked Did
you make improvements to rental in 2015?
- If you say Yes, you will be taken through the screens for the Improvements election.
- If
you say No, you will see the screen Do
you have any items that aren't covered by your elections? Proceed
through the screens to enter these assets. (Screenshot #4)
Step
2. Enter your election-related items as other expenses.
- On the Rental Summary screen go to
the Expenses section and click on the Start/Update box.
Click I'll choose what I work on.
- Continue to the Any Other
Expenses? screen and enter the description and amount paid for the
assets. Click Continue when finished. (Screenshot
#5)
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
