Yes. Normally, larger items are entered as assets and depreciated over time. However, you can make an election to 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.
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,
rental properties or farms.
Here are the rules you need to meet to take this election:
- You don't have an applicable
financial statement (most people don't).
- You have a
consistent process for how you record expenses and assets.
- You record these items as expenses
on your books/records.
- The cost of each item as shown on
your receipt is $2,500 or less.
To make this election please follow these steps:
Part 1. Make
the election
- Click on Federal
Taxes > Wages & Income [In TT Self-Employed: Business
> Continue > I'll choose what to work on]
- In the Rental Properties and
Royalties section, click the Start/Revisit
button.
- If you have already started
adding information about your business, you will be asked if you want to
review your rental and royalty information. Click the Yes box.
- When you come to the Rental and
Royalty Summary screen. Click on the Edit box next to the
property.
- If you haven't already started
adding information about the property, continue through the screens to
enter the needed information.
- You will now be on the Review
Your [property name] Rental Summary screen.
- In the Assets/Depreciation
section, click on the Start/Update box.
-
If you’ve already entered some
assets, you will see the screen, Do you want to go directly to your
asset summary? Mark the button No, I want to review my answers to the annual elections questions and click Continue.
- When you come to the screen, Did
you buy any items that each cost $2,500 or less in 2015? mark the Yes
button and click Continue. (See Screenshot #1, below.)
- On the screen Let's see if you
qualify to deduct these items as expenses, mark both of the Yes
buttons and click Continue. (Screenshot #2)
- On the Now, let's review each
item you bought screen, mark whether all your new assets cost $2500 or less. (Screenshot
#3)
- If you mark that every item
cost $2,500 or less, you will be brought to the Rental Summary
screen. You have elected the De Minimis Safe Harbor provision. Proceed with Step 2, below.
- If you mark that some cost above
$2,500, you will be asked Did
you make improvements to rental in 2016?
- If you say Yes, you will be taken through the screens for the Improvements election.
- If
you say No, you will see the screen Do
you have any items that aren't covered by your elections? Proceed
through the screens to enter these assets. [Screenshot #4]
Step
2. Enter your election-related items as other expenses.
- On the Rental Summary screen go to
the Expenses section and click on the Start/Update box.
Click I'll choose what I work on.
- Continue to the Any Other
Expenses? screen and enter the description and amount paid for the
assets. Click Continue when finished. [Screenshot
#5]
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