You could not deduct 100% of the tools purchased for the W2 income job on the LLC, they would have to be prorated. For example if you puchased an air compressor for your day job and used it 50% ther and 50% for the LLC, you would only be able to write off 50% under the LLC.
Key Considerations:
- Documentation: Keep impeccable records! This includes purchase receipts, and most importantly, documentation of your business use percentage. A log (even a simple spreadsheet) detailing when and how the asset was used for your LLC versus your W-2 job or personal use is highly recommended in case of an audit.
- No Double-Dipping: You cannot deduct the same expense twice. If you claim 70% of the computer's cost for your LLC, you cannot try to claim the remaining 30% anywhere else on your personal return for your W-2 job (unless a very rare exception applies, which is unlikely for most employees).
- Tax Basis: When you sell the asset later, its tax basis will be reduced by the depreciation you've taken. This can impact any gain or loss on the sale. TurboTax will track this for you.
By following these guidelines and using TurboTax's prompts, you can correctly prorate your tools and equipment expenses for your LLC.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
