Hi, I plan to replace my computer and tablet this year and wonder if I can deduct part of the purchases? I will use them partially for record keeping with Excel, eg. manage mileage tracked by cellphone, keep track of expense/income, keep track of device usage to figure out business portion, same as I do with current ones and cellphone just can't do the same efficiently.
I expect the business portion for computer would be over 50% but probably 20% for tablet.
Yes, the self-employed can deduct the cost of a business computer. The same goes for any other business equipment you buy.
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Reporting Self-Employment Business Income and Deductions ...
Thank you for quick reply.
I understand the computer expenses as determined by depreciation. So how many years maximum can you deduct it? Assume I will continue the current gig.
@Python0608 wrote:
Thank you for quick reply.
I understand the computer expenses as determined by depreciation. So how many years maximum can you deduct it? Assume I will continue the current gig.
If used less than 100% for business, you have to allocate the cost on a percentage basis, and you have to have some kind of reliable written record to show the IRS how you determined the percentage, if audited.
You would list the item as a business asset. There are two different ways to expense the asset in the year you buy it, instead of over the class life (which is probably 5 years), and if you qualify for either of those provisions, Turbotax will tell you. (If you use the asset less than 50% for business, you can only depreciate the business portion over the class life.)
Remember that if you fully depreciate or expense the cost, and then sell it used, that will be taxable business income.
Is there any standard requirement for "reliable written record". Any examples? I'm thinking about creating an Excel sheet with columns like business, task, date and task time, will that be sufficient? I can add those time up and divided by the total time of computer on to figure out the business portion.
@Python0608 wrote:
Is there any standard requirement for "reliable written record". Any examples? I'm thinking about creating an Excel sheet with columns like business, task, date and task time, will that be sufficient? I can add those time up and divided by the total time of computer on to figure out the business portion.
That sounds fine. "reliable" to the IRS generally means that the record was contemporaneous (meaning it was kept close enough in time to the actual event that your memory was fresh, and not something you made up the night before the audit 3 years later) and that your record is sufficiently detailed to determine whatever the record needs to prove. So for computer usage, date, time, and purpose (business or personal) would seem to cover it.