For 2021, I purchased a computer to be used for my part time consulting business. Two part question:
- While I see areas within TurboTax to deduct supplies and rentals, I can't find where to input a computer / software / monitor / printer purchase.
Would prefer to deduct in one year, although the computer/monitor/software was quite expensive. Is this limited to $2500? Expect to use for next 3 years or so.
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The election for items $2,500 or less is called the De Minimis Safe Harbor Election. If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses.
This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.
Look for the Asset category in Business expenses.
The computer is an asset, and is usually depreciated over 5 or 7 years. Turbo tax can help you with that.
Otherwise, you could take accelerated depreciation on it. And... another tip: to be a business, you must show a profit in 3 out of 5 years, or else it is classified as a hobby. Hope this helps.
You will still want to list them individually as Assets to be depreciated. The $2,500 limit refers to individually invoiced items and includes any sales tax. Even if you can expense the cost, you still must report depreciation information.
ZYXVW1,
Thx for the reply. I know I am going to perform some work this year (year 2) per request from my previous employment, probably going to also do it next year as well due to a project that is about to get underway.
I couldn't find where in TurboTax to do this depreciation, accelerated or not. And, am I limited to $2500 in total, or just for the hardware?
The election for items $2,500 or less is called the De Minimis Safe Harbor Election. If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses.
This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.
Look for the Asset category in Business expenses.