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Billcf
New Member

Self employed deduction question

I just want to clarify. 

inunderstand that as an employee, you may deduct tools that are more than 2% of your income. 

as a self employed maintenance, repair, and groundskeeper - can I deduct my tools purchased exclusively for and in line with common practice of use for the work type as long as they fall below the de Minimus of 2500$ 

 

for example, I needed to buy several clamps, drills, tool belt, etc 

 

also unsure of the useful life of one year or less - as many examples of total deductions I see are tools known to last longer tHan one year 

 

seperatly, is mileage deductible to and from the properties I work for ? 

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7 Replies

Self employed deduction question

Expenses you incur as an employee are no longer deductible as miscellaneous itemized deductions on Schedule A of your 1040. These deductions were eliminated by tax reform (the TCJA) for the tax years 2018-2025.

Billcf
New Member

Self employed deduction question

Thank you. So to be clear, for now on - unless something changes - as a self employed IC, I can no longer deduct any tools or purchases made for wotk whatsoever 

Self employed deduction question

No! If you are self-employed, you can deduct the cost of those items, whether through expensing or some other cost recovery method.

 

The restriction I mentioned is applicable to (basically) W-2 employees.

Billcf
New Member

Self employed deduction question

Thank you. So tools I bought that are below 2500$ I can in fact deduct from my taxes ? I appreciate your help 

Self employed deduction question

@Billcf You misunderstood.   It is W-2 employees who cannot get a federal deduction on job-related expenses like tools, supplies, home offices, etc.   If you are a self-employed independent contractor, you enter your business expenses on a Schedule C when you prepare your tax return.

 

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

 

 

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1099-nec/1099-nec/L5qTsBiSe_US_en_U...

 

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

 

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

 

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

 

 

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

 

 

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Self employed deduction question


@Billcf wrote:

....So tools I bought that are below 2500$ I can in fact deduct from my taxes ?


Yes. You can use the de minimis safe harbor election.

 

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ad...

Self employed deduction question

If you are self-employed you can deduct ordinary and necessary expenses for the kind of work you do.  "An ordinary expense is one that is common and accepted in your field of trade, business, or profession.  A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary."  That includes tools and other supplies.  Items with a useful life expectancy more than one year normally must be depreciated, but you seem to already know about the $2500 safe harbor rule.  If you buy tools or equipment that are partly used for business and partly for personal use, you must allocate the cost on a percentage basis, and you must have some kind of record or notes showing your method for determining the business percentage, in case of audit. 

 

Vehicle costs are deductible subject to certain rules and limits depending on whether you are using a business-only vehicle or a personal vehicle that is also used for business, and also subject to certain rules on which trips count as deductible trips.  These rules are covered in chapter 4 of publication 463. 

https://www.irs.gov/forms-pubs/about-publication-463

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