There are several electronic devices like computers, tablets, and smartphones you can deduct as a small business owner.Look around your house, your office, your school, or even the grocery store. There is a high probability you will see someone using a computer, a tablet, or a smartphone – maybe even all three at once if it’s a good multitasker!
We are surrounded by technology that makes our lives so convenient. But can you write off these tech items when filing your return with the IRS? The answer is “yes” in some cases. Here’s why:
Deducting Computers – Laptops, Desktops, etc.
If you purchase a desktop or laptop computer and use it more than half of the time conducting activities related to your work as a small business owner or contractor, the cost of the computer qualifies as an IRS tax deduction. But if you primarily use the computer for personal activities like playing Minesweeper or watching movies on Netflix, the cost of it does not qualify for this write-off. This means buying a computer should fall under the category of business expenses in order for the IRS to let you deduct your machine.
Remember that hardware (printers, scanners, etc.), software (Microsoft Office, Adobe Photoshop, etc.), and other accessories you use with your PC can be deducted as well. The same goes for cloud storage services or other one-time and ongoing expenditures you have to pay to work as a small business owner or self-employed contractor. The main caveat is that you must use them for business.
Another point worth mentioning is that if you buy a computer for educational purposes, it may qualify as an itemized deduction. An exception to this rule is if you are already claiming an education-related tax credit to help cover its cost.
Deducting Tablets – iPads, etc.
Much like deducting computers, you can also write off the cost of a tablet computer that you buy for your small business or for work you do as a 1099 independent contractor. Again, as long as you use your iPad or other tablet more than half of the time you spend on it for work purposes, it qualifies for the IRS write-off as a business expense. If you buy apps for your tablet, such as the mobile Microsoft Office document viewer app, you can claim app store purchases as a deduction as well if they fall under business expenses. The same goes for other accessories like an external keyboard or a cable to connect your tablet to a computer.
Deducting Smartphones – Androids, iPhones, etc.
Are you one of the millions of people out there with a smartphone attached to your ear? Or maybe you have a Bluetooth earpiece in your ear instead? If so, you probably have a pretty hefty cell phone and data bill every month. Fortunately, deducting smartphones is a great possibility if they are associated with conducting business.
In most cases, the percentage of time you spend as a self-employed individual or business owner on a smartphone can be written off as a tax deduction on your return as a business expense. For example, let’s say you utilize your iPhone about 60% of the time for business-related phone calls, text messages you send to your employees, or data you use when looking something up on a website or mobile app. Based on this percentage, you are eligible to write off 60% of your smartphone bill when you file your tax return with Uncle Sam. If you have a separate smartphone that you use exclusively for business purposes, every bill you get for it would be deductible.
In addition to ongoing use, the initial purchase price of a smartphone can be written off. You can calculate this by determining the percentage of time you spend using the phone for business and then multiplying this percentage by the phone’s initial price. So if you buy a new phone for $100 and use it 60% of the time for your small business, you can take a $60 deduction on this cost. Of course, a smartphone you purchase that you exclusively use for business reasons is fully deductible.
To learn about more tax deductions for small business owners for the 2015 tax season and beyond, turn to the business accounting pros at 1-800Accountant. Call 1-800-222-6868 or visit www.1-800Accountant.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.