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david_a_straight
Level 3

I spent roughly $10,000 for software - where does this go in TurboTax (I think I have the home/business version)

Question 1:  In 2020 I spent roughly $10,000 on new software.   I don't know where to put this for a deduction.  I've heard of something called a 179 deduction - I'd like to take that.

 

Question 2:  I pay $2000 per year for software subscription (this isn't related to Question 1 - it isn't the same software).  Where do I put this value?   

3 Replies
DanielV01
Expert Alumni

I spent roughly $10,000 for software - where does this go in TurboTax (I think I have the home/business version)

It depends.  Please clarify by what you mean when you say new software.  Do you mean one program, or a number of programs whose total is around 10,000?  Depending on the situation, there might be two different ways to expense the item.

 

If the software is one program, then you would set the expense item up through the depreciation screens.  A large expense like this normally is taken gradually over the course of several years.  But electing for a Section 179 deduction is an option to take the entire expense at once.  You can also choose special bonus depreciation, which would also deduct 100% of the value, and is definitely a more advantageous way to claim if either your state does not have an income tax or also follows and allows the special depreciation provision on the state return.  (If your state does not, and you choose to use special depreciation, then the state's depreciation must still be tracked over the next several years.

 

However, if the software consists of several smaller programs, and none of the programs is valued at more than $2500, then you could select the Section 121 de minimis exception instead.  This is a provision that allows you to simply expense items that have a relatively low individual value so that tax returns are not overly cluttered with depreciation items.

 

As far as the software subscription is concerned, you can use a category like Dues and Subscriptions to report.  The yearly software license is not a depreciable asset.  It is a straight expense.

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david_a_straight
Level 3

I spent roughly $10,000 for software - where does this go in TurboTax (I think I have the home/business version)

I purchased one software program for just under $10,000.  I stuck this in the assets area and I found the Section 179 option.   I'm not really sure if the special bonus depreciation is better or not.   I'm in California - we have state taxes - but I'm still in the Federal portion of TurboTax.   

 

Anyway, thanks for the help.

DawnC
Expert Alumni

I spent roughly $10,000 for software - where does this go in TurboTax (I think I have the home/business version)

You may want to do a trial run and see what the tax benefits/consequences of each scenario provides.   There are many factors to consider when opting for a particular method.   The articles below may help!

 

Depreciation of Business Assets

 

Managing Assets  

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