Can I use the de minimis safe harbor election as a part-time freelancer?

[amandagmoody]

Can a computer used only 30% of the time for business be deducted under the de minimis safe harbor election? Do I deduct only 30% of the purchase price? Can I use de minimis safe harbor election if the majority of my icome is from W-2s?

[DaveF1006]

Yes, you can use the de minimus safe harbor rule if it is is only used 30% for your free-lance business. When you enter the information, about the computer and indicate you use it for 30% free-lance business, Turbo Tax automatically allocate the cost. For an example if your computer costs $600, it will give you an expense allocation of $600 * .30 = $180

[amandagmoody]

Thank you for the response!

I'm a little unclear on how to access the automatic allocation.

I've seen in other threads that could use 'miscellaneous expense' and declare it as a 'safe habor asset' with the 30% being the amount decaled for the deduction.

Would that be the case for TurboTax self- employed edition?

[DaveF1006]

No, you will enter this as a other miscellaneous expense after declaring this computer expensed as a safe harbor election in the Asset category section in the return.

1. Go to federal>income and expenses>Self-Employment>show more
2. Self-employment income and expenses>start or revisit
3. If you haven't set up a business profile, the first part of the interview will have you tell us about your business.
4. You will see a screen to enter income for the business
5. After entering your income information then the program will ask you about your expenses. You can select all the categories of expenses that pertain to you business. 
6. First select assets and go through the questions especially when you get to the question asking did you purchase any assets for $2500 or less. Answer the questions to the very end when it asks you if you wish to expense your assets costing less than $2500 as an annual election for all your future assets.  This is where you make the safe harbor election.
7. Now go to other miscellaneous expenses. List the computer here and expense it 30% of the cost that you paid for it.
8. I apologize in my earlier answer in stating that there was a a place to enter the percentage of business use. There was if you would have claimed this as an asset and decided to depreciate it. For the expense however, you need to make that calculation just like I described above by taking 30% of the purchase price.
9. When it asks for a description, enter it as Computer-subject to the de minimus safe harbor election.

[amandagmoody]

Thank you for your detailed response!

Is there an instance where I would need to use the computer more than 50% of the time in order to use the safe harbor annual election, and deduct the total cost ( calculated for percent used for business) this tax year?

[ReneeM7122 · Accepted solution]

No, you don't have to use the computer more than 50% of the time in order to use the safe harbor annual election.

@amandagmoody

[amandagmoody]

Thanks!

I was a little  unclear on my initial question, so my apologies. But just to confirm- I don't need to use the computer more than 50% of it's use time for business purposes?

[ColeenD3]

@amandagmoody

No, not for safe harbor. That 50% rule applies to Section 179.