Good day. I bought a $300 external desktop hard drive to use for my business. I use it 70% of the time to store large files from my video work, but I do have a few personal files on it. Should I deduct this as a Business Expense (Supplies) or as a Business Asset?
Whenever I buy flash drives or hard drives that I use for business purposes 100% of the time, I've always entered them as a Business Expense (Supplies). But this hard drive I bought and use stores mostly files for my business (about 70% of the space), and I also store some personal files on it. It's an external desktop hard drive, so it just sits on my desk and does not move.
Thank you.
You will have to list it as an asset and monitor your personal use each year, as it may vary.
Thank you for your reply! When entering it as a Business Asset in Turbo Tax, it asks me "How do you want to deduct this item?"
I can choose:
"I'll deduct the full value of the item this year (take the Section 179 deduction)."
Can I just choose that option and deduct the full value and then not take any deductions for it next year?
Yes, you can choose that option. However, if your business use of the hard drive drops below 50% in any given year until it would have been fully depreciated, you will need to recapture some of the Section 179 deduction.
See the following TurboTax help article for more information:
Thank you! Yes, this hard drive is going to sit on my desk and store all my work files for it's entire lifespan, and will always be around 70% of its space.
One other question. If I take the Section 179 deduction for the hard drive this year, would I list that on next year's tax return under the Business Asset section? Or would I not list it next year since I am choosing to deduct the full value of the item and take the Section 179 deduction this year. I assume I should not include on next year's return.
I only ask because in 2020 I took the Section 179 deduction for a computer that I used for work 80% of the time, and when I started up Turbo Tax 2021 and transferred my 2020 return, it carried over that computer into this year's return. I deleted it from this year's return because I chose to deduct the full value of that computer and took the Section 179 deduction in 2020. That's what I was supposed to do because I chose the Section 179 deduction, correct?
Thank you!