In general, you can deduct work related expenses if they are “ordinary and necessary“ to the type of work you do. an item is usually considered an asset if it is durable — meant to last longer than one year — and has a value over $2500. Durable items less than $2500 can be deducted as expenses, and you can deduct other work related expenses such as office expenses, car mileage, advertising, and other expense and any other ordinary unnecessary expense.
Assets over $2500 must be depreciated over there working life — essentially, this means deducting a part of the cost each year over the working life instead of deducting the cost all at once. However, there are two procedures that will allow you to depreciate an asset all at once, TurboTax will walk you through these procedures if you are eligible. Be aware that if you place an asset in service with special depreciation and then stop doing the business before the regular depreciation life would have been over, you must re-capture or pay tax on the depreciation that you don’t qualify to claim. (For example, if a mountain bike has a useful life for five years and you depreciate it in one year, but then stopped the business after the second year, you don’t qualify for the remaining three years of depreciation and must pay them back because you took them all at once in the beginning.)
if you use an asset partly for business and partly for personal use, you must allocate the cost between personal and business use, and you must have some type of reliable record to show the IRS how you determine the allocation.
all of your business income and expenses are reported on a schedule C. You subtract the expenses from the income and pay tax on the net profit. If you have a net loss, that can sometimes be deducted from your other taxable income.
