Tax Deductions for Laptop Computers
If all you do with your laptop is check Facebook and blog about your cats, don't go dreaming of a tax write-off. If you use your laptop for business or investments, at least part of the time, you can write off some of the cost. You may also get a deduction if you buy a computer for your college-bound kids.
If you spend, say, $1,500 on a cutting-edge laptop for your home business, you can write off the entire cost this year under the IRS's Section 179 rule. You can instead depreciate the computer, deducting a little bit of the purchase price each year, if that works better for you. When you pay state taxes, depreciation may be the only option, as some states don't let you write off an asset completely in the year you buy it.
Buying a laptop for college might get you a write-off, depending on the circumstances. For example, the American Opportunity tax credit lets you take up to $2,500 in college costs off your tax bill. The cost of the laptop qualifies for the credit if having the computer is a requirement for your child to enroll or attend the college. If it isn't mandatory, the laptop's just another cost of parenthood.
If you itemize deductions on Schedule A, you can squeeze more of a tax break out of your laptop. Any tax-prep software you buy is deductible as a miscellaneous 2 percent expense. If you use your laptop to make investments, or if you bought it as a condition of getting your job, depreciation is a 2 percent expense as well. Add up all your 2 percent expenses, then deduct 2 percent of your adjusted gross income. Your write-off is whatever remains.
If your computer is deductible as a self-employment expense, you can also write off business-related software, repairs, maintenance and peripherals such as a new power cord or a laptop desk. You may, of course, use the computer part of the time for fun; in that case, you only get to write off part of the cost. If you come up for an audit and you only own one computer, the IRS may doubt that it's really 100 percent for business.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.