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Thread: Has anyone deduct a computer from their taxes?

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    Default Has anyone deduct a computer from their taxes?

    I bought an intel 7 iMac computer in Oct. I bought it because my old macbook was dying on me, and kept giving me problems while camming. I use the new computer specifically for camming. I have a personal computer I use on a daily basis. I was wondering if anyone had successfully deduct a computer and where did you put it under? Office expense or office supplies, or did you put it under other misc. expenses? Please advise.

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    Default Re: Has anyone deduct a computer from their taxes?

    yes as business equipment under Schedule C business expenses.

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    Default Re: Has anyone deduct a computer from their taxes?

    I was just told that computers have to be listed under "Depreciable property"- meaning that you can't deduct all of the amount of the laptop all at once.

    i.e. I bought an Asus for $500-ish in mid-January, and since the laptop is (theoretically) usable for more than 1 year, I can't deduct the full $500 all in one year.
    There's this list of calculations that H&R Block gave me, and I ended up only deducting $24. It was really confusing for me, and I have no idea if I get to deduct more of it next year? Anyone know?

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    Default Re: Has anyone deduct a computer from their taxes?

    Section 179 for 2012 works like this ...

    (snip)"Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

    Several years ago, Section 179 was often referred to as the "SUV Tax Loophole" or the "Hummer Deduction" because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV's and Hummers). But, that particular benefit of Section 179 has been severely reduced in recent years, see 'Vehicles & Section 179' for current limits on business vehicles.

    Today, Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses - and millions of small businesses are actually taking action and getting real benefits.

    Essentially, Section 179 works like this:
    When your business buys certain items of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).

    Now, while it's true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.

    In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting over the next few years. That's the whole purpose behind Section 179 - to motivate the American economy (and your business) to move in a positive direction. For most small businesses (adding total equipment, software, and vehicles totaling less than $500,000 in 2013), the entire cost can be written-off on the 2013 tax return.

    Limits of Section 179
    Section 179 does come with limits - there are caps to the total amount written off ($500,000 in 2013), and limits to the total amount of the equipment purchased ($2,000,000 in 2013). The deduction begins to phase out dollar-for-dollar after $2,000,000 is spent by a given business, so this makes it a true small and medium-sized business deduction."(snip)


    So ... A. H&R Block steered you wrong by not utilizing Section 179

    B. because H&R Block set up a depreciation schedule for your computer on this year's tax return, you're stuck sticking with that same schedule in future years until the computer is fully depreciated.

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    Default Re: Has anyone deduct a computer from their taxes?

    Okay... I didn't know- H&R told me to do depreciable property... so, I can just stick the full $500 in Job expenses?

    (side note- do you ladies deduct nails, tanning, and outfit expenses? I ask because these could also be seen as personal use only.)

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    Default Re: Has anyone deduct a computer from their taxes?

    ^^^ nope on listing the computer as both depreciable property and also as a Section 179 expense ! It's one or the other. Also if you're saying that you bought the new computer in January of 2013 you can't write it off on the 2012 tax return ( have to wait until the 2013 tax return to be filed a year from now ).

    Nails, tanning, etc. are both subject to the IRS 'housewife test', as well as a recent tax court ruling involving celebrities no longer being able to deduct expenses related to personal appearance.

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    Default Re: Has anyone deduct a computer from their taxes?

    Oh, no, sorry- I meant, I can take it off depreciable property and deduct the full amount somewhere else?
    On my H&R form, it has a "Job Expenses" place- can I put it there? < That's what I meant.

    Thanks Melonie! (been frustrated with this ALL day)

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    Default Re: Has anyone deduct a computer from their taxes?

    Using Turbo Tax Home & Business I have the computer categorized under business expenses: other common business expenses.

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    Default Re: Has anyone deduct a computer from their taxes?

    no, job expenses apply to employees. Do you receive regular weekly paychecks with taxes withheld ? If no, then you aren't an employee and any 'business expenses' must be listed on Schedule C.

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    Default Re: Has anyone deduct a computer from their taxes?

    What i don't get is that it's not showing any refunds for the computer. Instead it's showing that I owe them $22.

    I had the computer listed in business expense, but then I read what Melonie said about section 179 it's under "business assets" so I changed it. But no change regarding refunds.

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    Default Re: Has anyone deduct a computer from their taxes?

    ^^^ as a sole proprietor business operator, you'll wind up paying 15.3% Social Security / medicare tax on every dollar of income. So even if your net business earnings are reduced to $800 or whatever due to writing off the entire purchase price of the computer as a business expense, unless you filed and paid quarterly estimated tax payments it is unlikely that you'll actually get a refund.

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    Default Re: Has anyone deduct a computer from their taxes?

    I deducted one when I was doing a lot of cam work, and part of a room, and part of the light bill. The tax lady said though, it tends to throw up red flags, but I had pay stubs from the place I got paid from.. The IRS distain for the service industry, waitress, or stripper, no matter..

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    Default Re: Has anyone deduct a computer from their taxes?

    yes the 'home office' tax deduction is reportedly on this year's IRS priority list for audits. The reasons of course are that the space must actually be fully paid for by the person claiming the deductions ( i.e. 100% of rent, utilities etc. ), the space must be SOLELY utilized for business purposes ( i.e. cam bedroom cannot double for personal bedroom ), etc. If you meet these conditions and have all of the receipts, by all means claim it ... but be aware that an audit will probably follow.

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