Are Work-Related Devices a Tax Write Off?

Expenses Woman with cell phone and computer, which may be work-related devices that are deductible.

You may have heard tax reform eliminated tax deductions for un-reimbursed employee business expenses beginning with your 2018 taxes. If you own your own business, however, you can still deduct business expenses.

So what high-tech toys (oops, excuse me, necessary work-related devices) can you deduct? Here are the rules.

Cell phone. If you use your cell phone exclusively for business, then the cost of the phone equipment and the cost of the monthly service are both tax-deductible. If you use the phone partly for business, well – you can do the math. Use it 50% for business and 50% for personal, you can deduct half of the costs.

Computers, laptops, notebooks, tablets. Your business expenses must be necessary, customary and reasonable, according to the IRS. That means that you have to have a business use for your computer or iPad. 

If you work in the computer industry, this is a no-brainer, but if you are a hairdresser, your computer purchase would be necessary and directly related to your business if you needed it to order supplies, keep track of receipts and expenses, etc. If that use requires you to be connected to the internet, then the cost of connectivity will also be deductible, but if your kids use the same device to do their homework and play video games (or you do), then only the business portion of the costs will be deductible.

Internet usage. If you work while on airplanes or in hotels and you pay for internet connectivity in the air or at the place of lodging, that cost is tax-deductible if it is related to business activities.

Software. Here’s the bad news first: the latest gaming software doesn’t qualify for a deduction unless you are in the gaming industry and need it for work. 

If you buy Quickbooks Self-Employed to keep track of your business income and expenses and TurboTax Self-Employed to prepare your self-employed tax return, those expenses will probably qualify for a deduction. It is likely that the standard office suite programs for word processing and spreadsheets will as well. Of course, if the software has both business and personal usage, you may not be able to deduct the full cost.

Now or later? You can deduct the full amount of the gadget in the year it was acquired under IRC Sec. 179, or you can amortize it over several years (generally 5 – 7 years), deducting a fraction of the cost each year. Most people opt to deduct it all at once.

Under tax reform, you can deduct up to $1,020,000 for qualified business equipment on your 2019 taxes. Examples of qualified business equipment are computers, computer software, office furniture and equipment. Six-passenger SUVs less than 14,000 lbs placed in service and used for business may qualify for up to a $25,500 deduction for tax year 2019.

Don’t worry about knowing about these tax deductions when you file. TurboTax Self-Employed asks you simple questions about you and your business and gives you the tax deductions and credits you’re eligible for based on your entries. TurboTax Self-Employed helps you uncover industry-specific tax deductions that you may not even be aware of. If you have questions, you can connect live via one-way video to a TurboTax Live Self-Employed CPA or Enrolled Agent with an average of 15 years experience to get your tax questions answered. TurboTax Live Self-Employed CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your taxes.

You can also use QuickBooks Self-Employed to easily track your business income and expenses year-round and then export your information directly to TurboTax Self-Employed to make filing your taxes easy at tax-time.

Comments (3) Leave your comment

  1. On the subject of softwares, can I expense Photoshop if I purchase it to create logos and designs for my business?

    1. Hi Sam,
      To be deductible, a business expense must be both ordinary and necessary.

      An ordinary expense is one that is common and accepted in your field of business.
      A necessary expense is one that is helpful and appropriate for your business.

      Examples of qualified business equipment are computers, computer software, office furniture, and equipment.

      Using TurboTax Self Employed, https://turbotax.intuit.com/personal-taxes/self-employment-taxes/ helps manage and automatically find industry-specific business deductions.

      Thank you

  2. How about repairs and improvements to rental apartment property. Can those be expensed under 179 or what amortization schedule would apply in 2018?
    Also, does rental apartment income qualify for the 20% reduction?

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